FRI, APRIL 6 2018-theG&BJournal-FCMB Group Plc released its FY-2017 financial statement, showing decline in top and bottom line performance in the full year. Gross Earnings declined by 3.66% to NGN169.88 billion (in line with our expectation), while pre-tax and post-tax profits were lower by 29.47% and 34.38% at NGN11.46 billion and NGN9.41 billion respectively. Compared to Bloomberg’s polled estimates, PBT was 10.03% higher than expected, while PAT was short by 12.71%.
Net interest income (NIM) inched higher by 1.43% to NGN70.53 billion, with interest expense (+11.26%) reporting a faster growth than interest income (+5.79%) during the year. Interest earned on cash and cash equivalents were higher by 17.86%, while interest income via investments in government and corporate securities grew by 7.29% to NGN24.70 billion.
NIM was 20 bps lower at 8.30%, following a 4 bps decrease in asset yield to 15.20%, and a 75 bps upturn in cost of funds to 7.15%.NIR also came lower by 32.73% to NGN32.12 billion, owing to 57.82% and 51.94% drop in net trading income and other income respectively, despite a 14.40% increase in net fees and commission income.
The decline in trading income was largely driven by the significant decrease in forex trading income by 79.51% to NGN28.26 billion, muting the growths recorded in the gains from treasury bills (+81.21% to NGN1.23 billion) and options and equities (NGN28.26 billion gain in 2017, from NGN2.81 billion loss in 2016) trading.
Despite decrease in total loans and advances to customers by 1.84% to NGN647.80 billion, the NPL to total loan ratio was 116 bps higher at 4.90%. However, cost of risk was 145 bps lower at 3.61%, against 5.06% in the previous year.
Total opex increased by 4.51% during the period, while the cost-to-income ratio surged to 67%, against 56.08% in the previous year. Tax charge was 7.33% higher at NGN2.05 billion, while the effective tax rate rose 614 bps to 17.90%, from 11.76% in the previous year.
A dividend of 10 kobo was proposed for the full year (2016: 10 kobo), translating to a yield of 4.20%.
FCMB, however, posted better performance in the final quarter. Gross Earnings (+23.62% q/q, +43.49% y/y)posted the strongest growth among the other quarters in the year, at NGN51.07 billion – 17.10% higher than our expectations.
Growth in interest income (+6.36% q/q, +13.20% y/y), coupled with a decline in interest expense (-6.42% q/q, -0.52% y/y), buoyed the rise in net interest income (+18.49% q/q, +26.24% y/y).
The NIR (+129.66% q/q, +355.58% y/y) also reported significant growth, as growths in net trading income (+82.36% q/q, -86.82%) and other income (+782.32%, -244.32%), muted the decline in net fee and commission income (-0.99% q/q, +28.23% y/y).
Provision for impairment charges during the period was the highest among the other quarters at NGN10.02 billion – a 273.54% and 877.02% surge from the previous quarter and the same period last year, respectively.
PBT (+68.01% q/q, +130.65% y/y) and PAT (+79.95% q/q, +202.30% y/y) also posted significant growths during the quarter.
According to analysts at Cordros Capital, “while noting the impressive Q4 result, we do not expect positive reaction to the 2017FY numbers, wherein the bank’s performance broadly lagged the previous year’s.”
