FSDH to begin merchant banking operation

LAGOS-First Securities Discount House, FSDH, Limited said it has applied to the Central Bank of Nigeria, CBN, for a merchant banking license.
Speaking at a forum in Lagos, heralding its forthcoming Annual General Meeting, Mr. Rilwan Belo-Osagie, Chief Executive Officer/Managing Director, FSDH, said its decision to commence merchant banking operations is borne out of its expansion programme, designed to enhance its capabilities in its core areas of business.
He said the company has already been granted an Approval-in-Principle by the apex bank, adding also that it will commence full operation immediately it secures the final approval.
He said, “In response to the repeal of the Universal Banking guidelines, we approached the CBN to apply for a merchant banking license.
“If the license is granted, we intend to expand our operational scope and take advantage of greater opportunities to enhance our present competencies in securities trading, asset management, financial advisory services and investment banking.”
On its performance for the December 31, 2011 financial year, the company declared a profit after tax of N2.75 billion compared to N3.10 billion in its 2010 financial year.
It posted a profit before tax of N2.91 billion compared to 2010’s figure of N3.43 billion, while its Earnings Per Share stood at N0.94, dropping by N0.15 from N1.09 recorded in 2010.
Its subsidiaries, FSDH Asset Management Limited posted a Profit after tax of N80 million, Pensions Alliance Limited, PAL recorded profit after tax of N241 million, while FSDH Securities closed the year with a profit after tax of N22.9 million.
To this end, the company is proposing a total dividend of N698.7 million for its shareholders, representing a dividend of N0.25 per share.
Belo-Osagie said the company was able to record the performance despite the challenging economic climate and the tight monetary policy regime of the CBN, as well as high interest rates which had a significant impact on the value of fixed income securities.
According to him, trading in fixed income securities represents a large proportion of the company’s activities and the effect of the high interest rates is reflected in 15 per cent reduction in our profit before tax when compared with the 2010 financial year.
He, however, said that despite the impact of interest rates on fixed income securities, the company will only undertake realignment of its investment strategy in line with its risk acceptance criteria.
He disclosed that the company has a strong management process and puts the interest of its investors into consideration before undertaking any investment.
However, he said the company will undertake a diversification of its investment portfolio in the near future, using its risk acceptance criteria.
“At FSDH, we have a strong risk management process; hence, we will not compromise the safety of our investors’ and clients’ funds,” he declared.
A review of the company’s results for the financial year under review showed that the  group’s total asset closed at N77.1 billion, while its shareholders’ funds stood at N19.2 billion in 2011, 12.3 per cent up from N17.1 billion it recorded in 2010.

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