FCMB Group Plc Q1’20 results – NIM improvement and FX gains propel earnings

FCMB opens ultra-modern cash center at Ikorodu, Lagos
FCMB Group Plc recorded a 30.6% YoY jump in earnings to N4.7 billion in its unaudited Q1’20 result. The growth in earnings reflects the 20.5% YoY increase in operating income amidst higher cost of risk (+40 bps).
  • Net interest income grew 24.2% YoY, supported by the 20 bps improvement in net interest margin (NIM). The higher NIM largely reflects the moderation in cost of funds during the quarter, driven by the low yield environment and sustained increase in low cost deposit (CASA ratio: 73.7% vs FY’19: 69.8% and Q1’19: 66.8%)
  • Non-interest income rose 11.4% YoY, largely driven by the 3.0x increase in FX revaluation gains to N1.4 billion. Net fee income rose mildly (+1.8% YoY), supported by growth in Service fees (+31.4% YoY) and Asset Management fees (+7.3% YoY). The improvement in Asset Management fees likely relates to the 26.0% YoY growth in AUM (6.0% QoQ) during the review period. Contrastingly, net trading gains declined 12.9 YoY, weighed by the 40.0% YoY fall in T-bill trading income
  • Operating expenses rose 14.7% YoY notably driven by the two-fold increase in IT expenses. Irrespective, cost to income ratio moderated by 3.6 ppts to 71.3% due to the 20.5% growth in operating income. Loan loss charges rose 60.9% YoY leading to a higher cost of risk at 1.8% (Q1’19: 1.4%)
  • Gross loans and advances to customers increased by 7.1% during the quarter but NPL ratio declined 20 bps to 3.5%. On the regulatory front, both capital adequacy (17.0%) and liquidity (36.0%) ratios remained above the required thresholds.

FCMB Group Plc Q1'20 results - NIM improvement and FX gains propel earnings - Brand Spur