FCMB Q3’15 Conference Call & Earnings Presentation: The key takeaways

Proshare

Thursday, January 04, 2016 5:22 PM / Taiwo Ologbon-Ori 
 
The macro-economic challenges remain daunting; with corresponding strict industry regulations. The new policy by Federal Government on full implementation of Treasury Single Account compounded the liquidity challenges within industry. However, the reduction in harmonized CRR on private and public sector deposit to 25% from 31% is expected to ease the liquidity challenges.

In the face of the above overwhelming challenges, FCMB Plc succumbed to micro economic pressures to post a disappointing financial performance.
 

Both PBT and PAT declined by 85% and 87% on year-on-year basis respectively. Aside weak performance of interest income and non-interest income, the significant surge in impairment charges contributed to the outlook. This has consequently depressed both ROE and ROA with a plunge by 313.9% and 315.2% on QoQ respectively.
 

In similar vein, we have observed falling risk assets management as NPL ratio closed above benchmark at 5.8% against 2.7%, driven mainly by impairment charges. Also, operating efficiency maintained unimpressive outlook as CIR remains bloated at 73.90% against 70.3% recorded in previous year comparable period.
 

Nonetheless, we commend the improved and robust balance sheet outlook with 12% growth on year-on-year basis despite pressure of TSA transfer
 

Below are the key takeaways from the 9Months earnings presentation as presented by the management of the bank; 
 

  •  The bank significantly missed all its targets;
  • Both ROE and ROA plunged significantly by 313.9% and 315.2% QoQ respectively, driven significantly by impairment charges   
  • Bloated CIR at 73.90% against 70.3% recorded in 2014 reflects sustained falling operating efficiency;   
  • Customer deposit declined by 10.5% and 2.7% on QoQ and YoY basis respectively;   
  •  Growing non-performing loans and huge impairment charges depressed bottom-line;   
  • Significant impairment in legacy risk assets portfolio eroded profitability;   
  • Unimpressive loan book performance drives Net interest income lower ;   
  • Subsidiaries posted losses across board and this increased pressure on bottom-line; 
  • Exposure to upstream impacted performance outlook;    
  • Scarcity of FX, lower COT and decline in non-interest income increased pressure on bottom-line; and 
  •  TSA transfer adversely impacted the total deposit position.
     

For further enquiries, contact securities@proshareng.com

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