Background
FCMB is predominantly a wholesale corporate bank with niche plays in the retail space, with a particular focus on high net-worth individuals, middle class and salaried government workers.
It has its root in investment banking and was incorporated as a private limited company in April 1982 and granted a banking license in August 1983. In july 2004, the bank changed its statue from a private limited company to a public limited liability company, and it listed on the Nigeria Stock Exchange in December 2004.
Over the years, FCMB has grown via both organic and inorganic means. More recently, in 2002, it concluded acquisition of Finbank Plc, a transaction which help bunk up the bank’s operational platform.
It is currently optimizing its larger platform and plans to grow its loan portfolios by improving its retail and SME operations. The bank has shares outstanding of 19.80 billion with shareholders’ funds of N143.70 billion as at December 31 2013 and a branch network of 280.
Financial Performance for December 2013
FCMB reported gross earnings of N131 billion for the year ended December 2013, representing an increase of 12 percent as against N116.83 billion in the corresponding period of 2012.
For the year ended December 2013, profit before tax (PBT) grew by 12 percent to y/y to N18.18 billion from N16.24 billion same period of the prior year (FY12).
Earnings per share EPS rose by 5 percent to 81k in FY13 from 77k in FY12
The impressive performance in the bank’s top line and bottom line were driven by a 30 percent increase in net interest income to N56.13 billion in 12M13 compared to N43.34 billion in 12M12, while loan loss expense shrank by 37 percent to N7.98 billion in the review period.
Return on equity (ROE) and return on assets which measures how the resources of owners have been used to generate profits were flat at 11 percent and 1.6 percent respectively.
Operating expenses in the review period jumped by 33 percent y/y to N58.15 billion as against N43.76billion in 2012, while operating expense ratio climbed to 44 percent in 2013 from 37.5 percent in 2012.
Net interest margins a measure of profitability and efficiency remained stable and flat at 13 percent.
The bank recorded a cost to income ratio of 69.02 percent in the review period as against 81.0 percent in FY12- a sign of improved efficiency. While loans to deposits climbed to 63.85 percent in 2M13 from 55.36 percent in 12M12-shows the bank is willing to create risk assets as deposits grow.
The customers and other deposits increased by 11 percent y/y to N715.21 billion in FY13 compared with N646.21 percent as at FY12.
Total loans and advances for the year ended December 2013 spiked by 26 percent year on year to N450.33 billion as against N357.80 billion in 2012.
FCMB group’s total assets in the review period (2013FY) rose by 11 percent y/y to N1 trillion compared to N908.2 billion as at 2012FY.
Share Performance and Outlook
The bank’s share price has been falling by 0.29 over the past year to close at N3.42 on the floor of the Nigeria Stock Exchange.
The bank has a market capitalization of N67.53 billion on the same day.
The economy of Nigeria will provide opportunity as the country’s Gross Domestic Product is expected buoyed to 7 percent representing 300bps in 2014 from 6.7 in 2013, according to First Bank Capital in a note released in January 20014.
It also had a price to book ratio of 0.46x, which makes its shares attractive to investors.
BALA AUGIE
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