Culled—Proshare

April 27, 2018/FBNQuest Research

Event: FCMB Group reports Q1 2018 results
Implications: Limited revisions to consensus 2018 PBT forecast.
Positives: PBT grew by 64% y/y, driven by strong double-digit growth in funding income
Negatives: Pre-provision profits declined by 24% q/q driven by q/q reduction in both revenue lines. 

This afternoon FCMB Group (FCMB) published its Q1 2018 results which showed that PBT grew by 64% y/y to N3.3bn. Although the double-digit earnings growth was primarily underpinned by a 12% y/y growth in pre-provision profits, a 2% y/y reduction in loan loss provisions also helped. In term of revenue drivers, although both revenue lines grew  y/y, funding income which advanced by 14% y/y was the stronger of the two. 

The growth in non-interest income came in at around 6% y/y. Further down the P&L, PAT growth narrowed to 31% y/y mainly because of a 60% y/y reduction in other comprehensive income. Sequentially, PBT and PAT fell by 30% q/q and 50% q/q respectively because of negative surprises on both revenue lines. 

Compared with our forecasts, PBT beat by 74% because of the positive surprise in funding income which came in around 15% higher than our estimate. FCMB’s Q1 PBT points towards a 2018E ROAE of 5.9%, slightly ahead of management’s guidance of c.5%. 

When annualised, FCMB’s Q1 2018 PBT tracks broadly in line with consensus 2018 PBT forecast of N12.5bn. As such , we expect to see limited revisions to consensus 2018E PBT forecasts and a subdued or neutral reaction from the market. 

FCMB shares have outperformed the index year-to-date. The shares have gained 66.9% ytd  vs. the 7.9% ytd gain delivered by the index. 

We rate the shares Underperform. 

Our estimates are under review. 

FCMB Group Q1 2018 results: actual vs. FBNQuest Capital Research estimates (N millions)