November 29, 2018 05.28PM / NSE with additional
comments from FBNQuest
FBNQuest – Initial Reaction
Implications: FCMB’s Q3 2018 results surprised positively relative to ours and consensus forecasts. When annualised, its 9M 2018 PBT of N14.8bn is well ahead of our 2018E PBT forecast of N16.5bn and consensus 2018E PBT forecast of 14.8bn. Although we would normally expect the market to react positively to the results given the extent of the positive surprise, the reaction may be dampened by the prevailing weak market conditions. Despite the stellar results, a potential deterioration in asset quality in Q4 2018 could pose significant downside risks to earnings.
Positives: Q3 2018 PBT advanced by 154% y/y to N 7.7bn on the back of a 183% y/y growth in non-interest income. The y/y growth in non-interest income was underpinned by fx related gains of N9.0bn in Q3 2018 vs. N428m for the comparable quarter of 2017. Further down the P&L, PAT grew by 394% y/y, thanks to a positive result of N7.6bn in other comprehensive income (OCI).
Negatives: Loan loss provisions were up by 172% y/y.
Although FCMB shares have outperformed the NSE ASI’s (-20%) year to date, the shares are down by -10.8%.
We rate FCMB shares Neutral. Our estimates are under review.
FCMB Group Q3 2018 results: actual vs. FBNQuest Capital Research estimates (N millions)
Source: NSE; FBNQuest Capital Estimates