EUR 48.04 For Business Accounts Only

FCMB GROUP PLC - Earnings beat estimates following cut

FCMB GROUP PLC

Earnings beat estimates following cut

FCMB released its FY’15 result with earnings coming in slightly better than our revised estimate. Following management’s profit warning in February, we had been finicky about FCMB’s FY’15 earnings – cutting our PAT forecast by 33%. Whilst top line rose 3% y/y to N153 billion (8% ahead of our estimate), bottom line declined 78% y/y to N4.8 billion butahead of our revised N2.4 billion estimate. Although management earlier warned about a spike in impairments in Q3’15 - particularly in the energy sector (stating that the trend continued in Q4’15), the pressure points appear to be across board with Non-Interest Income down 8% y/y whilst Interest Expense and Loan Loss Provision raced 32% and 41% north. Taking a closer look at Q4’15 standalone performance, we note that FCMB recorded a N254 million loan loss provision write-back as against the N6.9 billion write-off we had estimated. Also, following the monetary easing stance of the CBN in Q4’15, coupled with the mild decline in customer deposit, we had anticipated a significant moderation in Interest Expense in Q4’15. Surprisingly, Interest Expense doubled q/q in Q4’15 to N21.0 billion (well ahead of our N12.1 billion estimate).