FCMB Holdings reports 18.4% increase in profit to N17.7bn

Temitope Adebayo

FCMB Holdings has reported 18.4 per cent increase in profit for unaudited financial year statement for the period ended December 31, 2019.

The Holding’s profit closed the year under review at N17.72billion as against N14.97billion reported in the audited financial statement for the full year ended December 31, 2018.

FCMB Holdings in its unaudited results to the Nigerian Stock Exchange (NSE) profit before minimum tax and income tax rose by 8.5 per cent to N20 billion in 2019 from N18.44billion reported in 2018.

The group’s gross earnings grew by 5.3 per cent to N186.68billion in its unaudited results from N177.25billion reported in full-year ended December 31, 2018.

However, the group total assets grew by 24.3 per cent to N1.78trillion in 2019 from N1.43trillion reported in full-year ended December 31, 2018.

ARM Research in its latest report said, “Overall, key drivers of the result were the strong growth in interest income and lower provisioning, both of which masked a decline in Non-interest revenue and an increase in interest expense.

“As mentioned earlier, interest income rose by N9.6 billion YoY neutering pressure from higher interest expense (+N4.9 billion YoY). On balance, Net Interest Income expanded 6.5 per cent YoY to N77.3 billion with a related margin contracting 44 basis points YoY due to faster growth in interest-earning assets.

“Elsewhere, the bank reported lower loan-loss provision of N9.3 billion (-34 per cent YoY) with Cost of risk moderating by 93 bps YoY to 1.3%. Lastly, Non-interest revenue moderated 7.3 per cent YoY to N36.3 billion largely due to lower FX gains.

“Streamlining to the quarterly breakdown, PBT and PAT expanded by 80.6% QoQ and 112.4 per cent QoQ to N7.2 billion and N6.9 billion respectively on the back of an increase in NII and lower loan-provision.

“Despite increased funding cost, NII was higher by 19.8 per cent QoQ largely on the back of higher interest income on loans. Growth in funding cost was largely on the back of higher interest expense on deposits from banks.

“That said, NIM contracted marginally by 10 bps QoQ following faster growth in interest-earning assets. Elsewhere, loan- loss provision moderated 37.9 per cent QoQ to N1.5 billion.

“We think the performance over FY 19 was decent. Despite our expectation for pressured earnings over 2019, particularly due to the absence of FX gains, the bank was able to stay above the pressure. We will be on the watch for possible updates to the audited result following CBN’s approval.”

“Our last communicated FVE of N2.07 translates to a NEUTRAL recommendation on our rating scale. FCMB trades at a current P/B of 0.20x, a discount to 1-year average of 0.32x.