Friday March 29, 2019 / 9:00 AM / NSE With Additional Comments From FBNQuest Research
Initial Reaction - FBNQuest
Although FCMB’s FY 2018 PBT of N18.4bn was broadly in line with consensus forecast of N18.6bn, the results showed significant weakness in the final quarter. Q4 2018 PBT declined by -4% y/y and was significantly lower than the N7.7bn PBT that the bank delivered for the preceding quarter (mainly due to fx related gains). FCMB’s 2018 PAT of N16.8bn translates to an ROAE of 9.1%, just shy of management’s 10% guidance. Given the weak results, we expect to see a negative reaction from the market.
The bank made net recoveries of N514m in Q4 2018 compared with provisions of –N10.0bn in Q4 2017.
Pre-provision profit for Q4 2018 declined -25% y/y to N25.5bn, driven by funding income and non-interest income declines of -6% y/y and -54% y/y to N19.3bn and N6.2bn respectively. In addition to these negatives, opex also increased by 11% y/y and resulted in a 4% y/y decline in PBT.
Management has proposed a dividend per share of N0.14, in line with consensus N0.14 forecast but much lower than our N0.21 forecast. The dividend per share implies a yield of 7.3%
Year-to-date, FCMB shares have slightly outperformed the index. The shares have gained +1.6% compared with the -1.9% return on the NSE ASI.
We rate FCMB shares Outperform. Our estimates are under review.
FCMB Group Q4 2018 results: actual vs. FBNQuest Capital Research estimates (N millions)