FCMB Group H1’20 Earnings Release – Profits jump 29% y/y amid strong earnings growth

Must Read

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...

Audi electrifies FC Bayern Munich (Photos)

Enabled by the partnership with Audi: FC Bayern Munich is the first international football club to drive using electric...

Naira Further Depreciates against the USD at the BDC, Parallel Markets

In the just concluded week, Naira weakened further against the USD at the Bureau De Change and the parallel...
- Advertisement -

Half-year profits soar despite economic woes

FCMB recently released its H1’20 results, reporting a 9% y/y growth in Gross Earnings to ₦98.2 billion, 3% ahead of our estimate. This was mainly due to an 8% y/y growth in Interest Income to ₦76.1 billion driven by a 15% growth in income from investment securities, and a 14% y/y jump in Non-Interest Income to ₦22.0 billion.

Net Interest Income was also up 17% y/y, thanks to a 3% drop in Interest Expense amid a favourable yield environment and lower Interest paid on deposits. However, the bank recorded a significant rise in Loan Loss Provisions as expected, coming in at ₦7.7 billion (+41% y/y), while Operating Expenses grew by 11% to ₦48.6 billion.

Overall, this led to a 26% y/y growth in PBT, which came in at ₦11.1 billion, 2% above our estimate, while PAT came in 29% higher at ₦9.7 billion, giving us a basic EPS of ₦0.49.

Pandemic drag fails to materialize in Q2

Despite the dip in economic activity caused by the shutdowns in some Nigerian states at the start of Q2’20, FCMB performed better than expected across some key line items during the quarter.

The bank reported a 3% q/q increase in Non-Interest Income to ₦11.2 billion, thanks in part to a 32% increase in foreign exchange gains. This meant that whilst Net Interest Income declined by 4% q/q (22.3 billion) and provisions went up by 11% to ₦4.0 billion, PBT actually increased by 4% q/q to ₦5.6 billion.

Read Also:  INDIA TO CONSTRUCT LARGEST BATTERY ENERGY STORAGE IN AFRICA
- Advertisement -

The bank also reported a 21% YTD growth in Loans and Advances, with a further ₦30 billion added in Q2 alone (a 4% q/q increase). Furthermore, the bank reported an 11% q/q rise in deposits to ₦1.1 trillion; diving deeper, we observed a 12% increase in Current Deposits and a 22% q/q increase in savings deposits amounting to a total increase of ₦118.2 billion, whilst the more expensive Term Deposits declined by 5% or ₦12.3 billion.

We believe this bodes well for the bank’s Interest Expenses going forward and expect Interest Expenses in the coming quarters to remain in decline.

Target Price revised to ₦2.66 (Previous: ₦2.59)

With FCMB’s H1 performance coming in better than expected, we have adjusted our FY’20 expectations while remaining cautious due to the ongoing pandemic. Firstly, we increased our FY Net Interest Income projection to ₦80.9 billion (Previous: ₦76.5 billion), as a result of tamer interest expense growth and slightly higher Interest Income.

However, we also increased our Operating Expense figure to ₦90.9 billion (Previous: ₦88.4 billion). Thus, we project an FY’20 PBT of ₦20.6 billion (Previous: ₦18.9 billion) and PAT of ₦17.8 billion (Previous: ₦16.6 billion). This gives us an estimated EPS of ₦0.90 and DPS expectation of ₦0.14 (FY’19: ₦0.14). Therefore, we revise our target price to ₦2.66 (Previous ₦2.59) and maintain our BUY rating on the stock.

- Advertisement -
Read Also:  FCMB Rewards 2,576 Customers with Millions, Gifts in Millionaire Promo Season 5 (Pictures)

FCMB - BRANDSPUR

VETIVA RESEARCH

- Advertisement -
FCMB Group H1'20 Earnings Release - Profits jump 29% y/y amid strong earnings growth - Brand SpurFCMB Group H1'20 Earnings Release - Profits jump 29% y/y amid strong earnings growth - Brand Spur

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

FCMB Group H1'20 Earnings Release - Profits jump 29% y/y amid strong earnings growth - Brand SpurFCMB Group H1'20 Earnings Release - Profits jump 29% y/y amid strong earnings growth - Brand Spur

Latest News

Nigerian Government doing a poor job on water/sanitation and health care, citizens say.

Even before the COVID-19 pandemic, a majority of citizens say they went without needed medical care and clean water...

Polaris Bank Appoints Segun Opeke as Executive Director

Polaris Bank Limited has announced the appointment of Mr. Segun Opeke as an Executive Director of the Bank by the Board of Directors and...

Nosir Releases the New Music Project, ‘My Episode’

The new record features 10 hip-hop tracks that admit his rap prowess. 20 September 2020 - Nosir, rap artist and founder of Spade Gospel...

Mega deals as Konga Freedom Sales goes live today

All is set for the 2020 edition of the Konga Freedom Sales, an annual promotion by the foremost composite e-Commerce giant targeted at celebrating...

Audi electrifies FC Bayern Munich (Photos)

Enabled by the partnership with Audi: FC Bayern Munich is the first international football club to drive using electric power. The stars of the...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -FCMB Group H1'20 Earnings Release - Profits jump 29% y/y amid strong earnings growth - Brand SpurFCMB Group H1'20 Earnings Release - Profits jump 29% y/y amid strong earnings growth - Brand Spur