July 27, 2018/FBNQuest Capital
Event: FCMB Group reports Q2 2018 results Implications: FCMB’s Q2 PBT missed our forecast by 27% due to negative surprises from both revenues lines and opex. When annualised, FCMB’s H1 2018 PBT also tracks behind consensus 2018 PBT forecast of N15.3bn. Consequently, we expect to see a subdued reaction from the market.
Positives: Q2 2018 PBT grew by 109% y/y to N3.8bn. The strong earnings growth was driven by a 59% y/y growth in non-interest income and a -51% y/y reduction in loan loss provisions. The y/y growth in non-interest income was underpinned by strong y/y growth in fx trading income and fees generated from card services. Further down the P&L, PAT grew by 75% y/y. The slower growth in PAT relative to PBT was due to a combination of a 76% y/y spike in income tax expense and a negative result of –N677m in other comprehensive income (OCI) vs.-46% Q2 2017.
Negatives: PAT declined by 12% q/q mainly because of the negative result on the OCI line.
We rate FCMB shares Neutral. Our estimates are under review.
FCMB Group Q2 2018 results: actual vs. FBNQuest Capital Research estimates (N millions)
