FCMB Group Plc H1 2018 Conference Call and Earnings Presentation – The Key Takeaways

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FCMB Group Plc held its H1 2018 Investors and Analyst Conference Call Earnings Presentation. Proshare NG participated along with leading market analysts and professionals.

The management in its review of the macro-economy and regulatory environment stated that the economy at the macro level remained sluggish but stable especially around exchange rate and inflation while regulatory costs, particularly CRR and a further rise in AMCON levy, continued to weigh heavily on the performance of the bank.

FCMB Group Plc recorded a gross earnings of N83.93bn in H1 2018 as against N77.51bn in H1 2017, up by 8.28% YoY. This was driven by 29.2% YoY growth in non-interest income. The bank’s Profit After Tax increased by 89.67% YoY from N3.02bn in H1 2017 to N5.72bn in H1 2018.

The group statements of financial position reflected that its total asset declined as a result of pay-down of high cost deposits and reduction in its loan book which is as a result of a more conservative asset creation approach particularly in corporate space.

At the close of trading today, the share price of FCMB Group closed flat at N2.00k and has so far recorded +44.93% YTD return in 2018.

In a nutshell, below are the key takeaways from the H1 2018 earnings presentation made by the bank’s management;

1. The group recorded rising contribution from non-banking operations, particularly asset and wealth management, which is now 14% of group PBT.

2. The commercial and retail banking business has the highest contribution to group PBT with 72%, others are Asset & Wealth Management (14%), Investment Banking (4) and FCMB Group Plc (10).

3. The bank expects that its Asset and Wealth Management’s profit growth will surpass initial expectations and be marginally enhanced with the further marginal increase in its stake in Legacy Pensions which is awaiting SEC and CBN approval.

4. The bank plans to extend digital lending platform to capture new non-FCMB customers in Q3 2018; and

5. The bank recorded 20.6% YoY growth in NPL and states that the increase in NPL is adequately covered under IFRS 9.

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