Earnings ReportFeatured

Impressive Earnings, Attractive NPL, LDR, FCMB-Holdings Maintains Dividend at N0.14

Coy: FCMB Holdings Plc
Rating: Buy
Current Market Price: N1.45
LTD-Ratio: 69.29%

Non-Performing Loan Ratio: 3.67%

Year High: N2.20
Year Low: N1.45
Fair Value: N3.24

Key Investment Ratios

  • This report observed the financial performance indices of FCMB Holdings for the year ended 31st December, 2019; compared the same with that corresponding year 2018 to establish growth.
  • Loan to Deposit ratio was estimated at 69.29%, as against 73.53% in the corresponding year.
  • The total non-performing loan and advances at the end of the year is valued at N27.68 billion lower than the N40.19 billion stated in its 2018 financial performance document.
  • In other words, the Non-Performing Loan Ratio at the end of the just concluded year stood at 3.67% versus 5.90% at the end of 2018
FCMBH
Bourse Nigerian Stock Exchange
Code Name FCMB
Sector FINANCIAL SERVICES
Market Classification MAIN BOARD
Nature of Business Provision of banking and other financial services to corporate and individual customers
Date of Incorporation November 20th 2012
Date Listed June 21st 2013
End of Accounting Year 31st December
Website www.fcmb.com
Registrar CITY SECURITIES (REGISTRARS) LIMITED
Auditor KPMG PROFESSIONAL SERVICES
Share Price@Relsd (N)                                                    1.50
Earnings per Share                                                    0.88
Intrinsic Value(N)                                                    3.24
Share Outstanding 19,802,710,754
Market Capitalisation                                  29,704,066,131

Company figures

  • Gross Earnings at the of the year is estimated at N181.24 billion, same as 2.26% marginal growth above the N177.24 billion achieved at the end of 2018 financial year
  • Interest Income stood at N137.44 billion versus N131.66 billion at the end of 2018 business session
  • Interest Expenses equally improved marginally to N61.47 billion as against N59.08 billion in 2018
  • Thus, Net Interest Income is valued at N75.97 billion against N72.57 billion in the corresponding year
  • Operating Expenses adjusted down by marginal 4.75% to stand at N70.18 billion against N73.68 billion in 2018
  • Profit before Tax improved by 9.15% to stand at N20.13 billion against N18.44 billion in the comparable year
  • After accounting for Tax Expenses the management of FCMBH achieved N17.33 billion as profit for the year 2019, this is 15.80% above the N14.97 billion made at the end of 2018 business session
  • Similarly, Total Comprehensive Income stood at N20.07 billion, same as 19.10% above the N16.85 billion in 2018
FCMBH
Statement of Comprehensive Income
  2019 2018 %CHG
GROSS EARNINGS                181,249,930,000            177,248,909,000 2.26
INTEREST INCOME                137,447,224,000            131,662,948,000 4.39
INTEREST EXPENSES                  61,470,839,000               59,089,590,000 4.03
NET INTEREST INCOME                  75,976,385,000               72,573,358,000 4.69
OPEX                  70,187,594,000               73,686,960,000 4.75
DEPRECIATION                     6,712,909,000                 5,537,314,000 21.23
PBT                  20,130,397,000               18,442,297,000 9.15
TAX                     2,793,123,000                 3,470,869,000 19.53
PAT                  17,337,274,000               14,971,528,000 15.80
TOTAL COMP INCOME                  20,078,837,000               16,859,262,000 19.10
Statement of Financial Position
Total Assets            1,668,505,795,000         1,431,298,022,000 16.57
Total Liabilities            1,467,839,148,000         1,247,870,916,000 17.63
Net Assets                200,666,647,000            183,427,106,000 9.40
Retained Earnings                  34,187,857,000               28,962,144,000 18.04
Total Deposits            1,033,146,506,000            860,887,467,000 20.01
Total Loans and Advances                715,880,600,000            633,034,962,000 13.09
  • Total Assets for the year was valued at N1.66 trillion, this is 16.57% above the N1.43 trillion valued in the similar year
  • Total Liabilities on the other hand stood at N1.46 trillion as against N1.24 trillion in 2018
  • Net Assets is currently valued for N200.66 billion versus N183.42 billion in 2018
  • Retained Earnings stood at N34.18 billion, same as 18.04% above the N28.96 billion stated in the bank’s financial document in 2018
  • Total Deposits received by FCMH-Holdings stood at N1.03 trillion, this is 20.01% higher than the N860.88 billion deposit in 2018
  • Meanwhile, Total Loans and Advances improved by 13.09% to stand at N714.88 billion versus N633.03 billion in the corresponding year

Dividend Yield

  • At the end of the 2019 business session, the management of FCMB-Holdings had proposed a 14k cash dividend for investors whose names appear in the registrar records by 15th April, 2020
  • In other words, the qualification date for the said dividend is 14th April, 2020 while the payment date is slated for 28th April, 2020
  • The Pay-Out Ratio is estimated at 15.99%, lower than 18.52% cash dished out as dividend from 2018 earnings
  • Meanwhile, the dividend yield, estimated with the share price of FCMB on the floor of the exchange on the day the result was released stood at 9.33% above the 0.01% in 2018. Please note the large difference in price within the two year compared
DIVIDEND INFORMATION
Final Dividend                                        0.14                                    0.14
Interim Dividend 0.00 0.00
Total Dividend                                        0.14                                    0.14
Annual Pay-out Ratio 15.99% 18.52%
Final Dividend Yield 9.33% 0.01%
Annual Dividend Yield 9.33% 0.01%

 Financial Strength/Solvency Ratios

  • Debt Ratio which compared Total Assets to Total Liabilities stood at 0.88x or 88%, implying that the Total Liabilities is 88% of Total Assets. Note that Total Liabilities is inclusive of Total Deposits for the period.
  • Total Debt to Equity for the quarter stood at 7.31x, the same as 7.52% above the 6.80x estimated in 2018. This implies that the company used 7.31 times its equity through the year (Note: debt used to estimate the ratio is Total Liabilities and is inclusive of Total Deposits for the period).
  • Equity Ratio which compares Equity to Total Assets stood at 0.12x, as against the previous 0.13x, implying that the reported Equity value at the end of the period is 12% of FCMBH’s Total Assets. However, this is a 6.15% reduction from the previous estimate.
  • Estimated Beta value for FCMBH as at the time this report was compiled stood at 1.42 this is above-market beta but below industrial average.
Financial Strength/Solvency Ratio
TICKERS 2019 2018 %CHG
Debt Ratio                                        0.88                                    0.87 0.90
Total Debt to Equity Ratio (MRQ)                                        7.31                                    6.80 7.52
Equity Ratio                                        0.12                                    0.13 6.15
TICKERS FCMBH Industrial Average %CHG
Beta Value                                        1.42                                    1.56 8.97

Profitability Ratios

  • Pre-Tax Margin improved by 6.74% to 11.11%, as against the 10.40% estimated at the end of the 2018 financial year.
  • Interest Expenses to Gross Earnings inched up by 1.73% to 33.91% from the previously estimated 33.34%.
  • Return on Average Equity, at the end of the year, was estimated at 8.64% compared to the previous 8.61%.
  • See the table below for detailed profitability ratios and comparison.
PROFITABILITY RATIOS
TICKERS 2019 2018 %CHG
EBITDA MARGIN 47.16% 46.03% 2.47
PRE-TAX MARGIN 11.11% 10.40% 6.74
EFFECTIVE TAX RATE 13.88% 18.82% 26.28
IE TO GE 33.91% 33.34% 1.73
ROAE 8.64% 8.16% 5.85
ROAA 1.04% 1.05% 0.66

Efficiency Ratios

  • Operating Expenses to Gross Earnings Ratio stood slightly below that of the corresponding year by a marginal 6.85% having moved from 41.57% to 38.72%. This is an improvement in management efficiency
  • Gross Earning is the same as 10.86% of the Total Assets value at the end of the quarter. This is 12.28% below the 12.38% estimated in 2018.
  • It was equally established that 69.29% of the total deposits for the period were given out as loans and advances to customers, which is 5.77% below the 73.53% of deposit given out as loans and advances through 2018 business session.
EFFICIENCY RATIOS
  2019 2018  
OPEX TO GE 38.72% 41.57% 6.85
GE TO TA 10.86% 12.38% 12.28
LDR 69.29% 73.53% 5.77
Working Capital Ratio                                        1.14                                    1.15 0.90

Investment/Valuation Ratios

  • At the end of the year, N0.88 was earned on each unit of FCMBH shares listed on the floor of the exchange, higher than the N0.76 reported in 2018.
  • Following the same trend, Total Comprehensive Income per share is currently estimated at N1.01 which is 19.10% below the N0.85 earned in 2018.
  • The price of FCMBH at the time this report was released can replicate the earnings per share 1.71 times (P/E-Ratio=1.71x), lower than the 2.46x estimated in 2018. This is a positive adjustment, and its due to price adjustment on the floor of the exchange within the two years compared
  • The said earnings per share is a 58.37% yield of the price of FCMBH shares on the floor of the exchange when the result was released to the market, this is a higher yield when compared to 40.64% yield estimate of 2018.
  • Estimated Book Value per shares of FCMBH is currently N10.13, the same as 9.40% above the N9.26 of 2018.
  • Thus, Price to Book Value stood at 0.15x as against 0.20x, which simply implies that the stock is currently selling below its book value on the floor of the exchange.
Investment/Valuation Ratios
Tickers 2019 2018 %Chg
EPS 0.88 0.76 15.80
TCIP/SHARE 1.01 0.85 19.10
P/E-Ratio 1.71 2.46 30.36
Earnings Yield 58.37% 40.65% 43.59
BV/Share 10.13 9.26 9.40
PBV 0.15 0.20 26.28

Valuation

  • While trying to place a fair value on each unit of FCMB Holdings shares, we considered the average of two valuation models. FCFE Stable Growth Model valued the stock at N4.48 while H-Model placed the price at N2.00. We, therefore, arrived at an average value of N3.24 for each unit of its shares. Thus, considering the gap between the current market price of FCMBH shares and our fair value, we have rated the Holding Company a Buy.

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Earnings ReportFeatured

Impressive Earnings, Attractive NPL, LDR, FCMB-Holdings Maintains Dividend at N0.14

Coy: FCMB Holdings Plc
Rating: Buy
Current Market Price: N1.45
LTD-Ratio: 69.29%

Non-Performing Loan Ratio: 3.67%

Year High: N2.20
Year Low: N1.45
Fair Value: N3.24

Key Investment Ratios

  • This report observed the financial performance indices of FCMB Holdings for the year ended 31st December, 2019; compared the same with that corresponding year 2018 to establish growth.
  • Loan to Deposit ratio was estimated at 69.29%, as against 73.53% in the corresponding year.
  • The total non-performing loan and advances at the end of the year is valued at N27.68 billion lower than the N40.19 billion stated in its 2018 financial performance document.
  • In other words, the Non-Performing Loan Ratio at the end of the just concluded year stood at 3.67% versus 5.90% at the end of 2018
FCMBH
Bourse Nigerian Stock Exchange
Code Name FCMB
Sector FINANCIAL SERVICES
Market Classification MAIN BOARD
Nature of Business Provision of banking and other financial services to corporate and individual customers
Date of Incorporation November 20th 2012
Date Listed June 21st 2013
End of Accounting Year 31st December
Website www.fcmb.com
Registrar CITY SECURITIES (REGISTRARS) LIMITED
Auditor KPMG PROFESSIONAL SERVICES
Share Price@Relsd (N)                                                    1.50
Earnings per Share                                                    0.88
Intrinsic Value(N)                                                    3.24
Share Outstanding 19,802,710,754
Market Capitalisation                                  29,704,066,131

Company figures

  • Gross Earnings at the of the year is estimated at N181.24 billion, same as 2.26% marginal growth above the N177.24 billion achieved at the end of 2018 financial year
  • Interest Income stood at N137.44 billion versus N131.66 billion at the end of 2018 business session
  • Interest Expenses equally improved marginally to N61.47 billion as against N59.08 billion in 2018
  • Thus, Net Interest Income is valued at N75.97 billion against N72.57 billion in the corresponding year
  • Operating Expenses adjusted down by marginal 4.75% to stand at N70.18 billion against N73.68 billion in 2018
  • Profit before Tax improved by 9.15% to stand at N20.13 billion against N18.44 billion in the comparable year
  • After accounting for Tax Expenses the management of FCMBH achieved N17.33 billion as profit for the year 2019, this is 15.80% above the N14.97 billion made at the end of 2018 business session
  • Similarly, Total Comprehensive Income stood at N20.07 billion, same as 19.10% above the N16.85 billion in 2018
FCMBH
Statement of Comprehensive Income
  2019 2018 %CHG
GROSS EARNINGS                181,249,930,000            177,248,909,000 2.26
INTEREST INCOME                137,447,224,000            131,662,948,000 4.39
INTEREST EXPENSES                  61,470,839,000               59,089,590,000 4.03
NET INTEREST INCOME                  75,976,385,000               72,573,358,000 4.69
OPEX                  70,187,594,000               73,686,960,000 4.75
DEPRECIATION                     6,712,909,000                 5,537,314,000 21.23
PBT                  20,130,397,000               18,442,297,000 9.15
TAX                     2,793,123,000                 3,470,869,000 19.53
PAT                  17,337,274,000               14,971,528,000 15.80
TOTAL COMP INCOME                  20,078,837,000               16,859,262,000 19.10
Statement of Financial Position
Total Assets            1,668,505,795,000         1,431,298,022,000 16.57
Total Liabilities            1,467,839,148,000         1,247,870,916,000 17.63
Net Assets                200,666,647,000            183,427,106,000 9.40
Retained Earnings                  34,187,857,000               28,962,144,000 18.04
Total Deposits            1,033,146,506,000            860,887,467,000 20.01
Total Loans and Advances                715,880,600,000            633,034,962,000 13.09
  • Total Assets for the year was valued at N1.66 trillion, this is 16.57% above the N1.43 trillion valued in the similar year
  • Total Liabilities on the other hand stood at N1.46 trillion as against N1.24 trillion in 2018
  • Net Assets is currently valued for N200.66 billion versus N183.42 billion in 2018
  • Retained Earnings stood at N34.18 billion, same as 18.04% above the N28.96 billion stated in the bank’s financial document in 2018
  • Total Deposits received by FCMH-Holdings stood at N1.03 trillion, this is 20.01% higher than the N860.88 billion deposit in 2018
  • Meanwhile, Total Loans and Advances improved by 13.09% to stand at N714.88 billion versus N633.03 billion in the corresponding year

Dividend Yield

  • At the end of the 2019 business session, the management of FCMB-Holdings had proposed a 14k cash dividend for investors whose names appear in the registrar records by 15th April, 2020
  • In other words, the qualification date for the said dividend is 14th April, 2020 while the payment date is slated for 28th April, 2020
  • The Pay-Out Ratio is estimated at 15.99%, lower than 18.52% cash dished out as dividend from 2018 earnings
  • Meanwhile, the dividend yield, estimated with the share price of FCMB on the floor of the exchange on the day the result was released stood at 9.33% above the 0.01% in 2018. Please note the large difference in price within the two year compared
DIVIDEND INFORMATION
Final Dividend                                        0.14                                    0.14
Interim Dividend 0.00 0.00
Total Dividend                                        0.14                                    0.14
Annual Pay-out Ratio 15.99% 18.52%
Final Dividend Yield 9.33% 0.01%
Annual Dividend Yield 9.33% 0.01%

 Financial Strength/Solvency Ratios

  • Debt Ratio which compared Total Assets to Total Liabilities stood at 0.88x or 88%, implying that the Total Liabilities is 88% of Total Assets. Note that Total Liabilities is inclusive of Total Deposits for the period.
  • Total Debt to Equity for the quarter stood at 7.31x, the same as 7.52% above the 6.80x estimated in 2018. This implies that the company used 7.31 times its equity through the year (Note: debt used to estimate the ratio is Total Liabilities and is inclusive of Total Deposits for the period).
  • Equity Ratio which compares Equity to Total Assets stood at 0.12x, as against the previous 0.13x, implying that the reported Equity value at the end of the period is 12% of FCMBH’s Total Assets. However, this is a 6.15% reduction from the previous estimate.
  • Estimated Beta value for FCMBH as at the time this report was compiled stood at 1.42 this is above-market beta but below industrial average.
Financial Strength/Solvency Ratio
TICKERS 2019 2018 %CHG
Debt Ratio                                        0.88                                    0.87 0.90
Total Debt to Equity Ratio (MRQ)                                        7.31                                    6.80 7.52
Equity Ratio                                        0.12                                    0.13 6.15
TICKERS FCMBH Industrial Average %CHG
Beta Value                                        1.42                                    1.56 8.97

Profitability Ratios

  • Pre-Tax Margin improved by 6.74% to 11.11%, as against the 10.40% estimated at the end of the 2018 financial year.
  • Interest Expenses to Gross Earnings inched up by 1.73% to 33.91% from the previously estimated 33.34%.
  • Return on Average Equity, at the end of the year, was estimated at 8.64% compared to the previous 8.61%.
  • See the table below for detailed profitability ratios and comparison.
PROFITABILITY RATIOS
TICKERS 2019 2018 %CHG
EBITDA MARGIN 47.16% 46.03% 2.47
PRE-TAX MARGIN 11.11% 10.40% 6.74
EFFECTIVE TAX RATE 13.88% 18.82% 26.28
IE TO GE 33.91% 33.34% 1.73
ROAE 8.64% 8.16% 5.85
ROAA 1.04% 1.05% 0.66

Efficiency Ratios

  • Operating Expenses to Gross Earnings Ratio stood slightly below that of the corresponding year by a marginal 6.85% having moved from 41.57% to 38.72%. This is an improvement in management efficiency
  • Gross Earning is the same as 10.86% of the Total Assets value at the end of the quarter. This is 12.28% below the 12.38% estimated in 2018.
  • It was equally established that 69.29% of the total deposits for the period were given out as loans and advances to customers, which is 5.77% below the 73.53% of deposit given out as loans and advances through 2018 business session.
EFFICIENCY RATIOS
  2019 2018  
OPEX TO GE 38.72% 41.57% 6.85
GE TO TA 10.86% 12.38% 12.28
LDR 69.29% 73.53% 5.77
Working Capital Ratio                                        1.14                                    1.15 0.90

Investment/Valuation Ratios

  • At the end of the year, N0.88 was earned on each unit of FCMBH shares listed on the floor of the exchange, higher than the N0.76 reported in 2018.
  • Following the same trend, Total Comprehensive Income per share is currently estimated at N1.01 which is 19.10% below the N0.85 earned in 2018.
  • The price of FCMBH at the time this report was released can replicate the earnings per share 1.71 times (P/E-Ratio=1.71x), lower than the 2.46x estimated in 2018. This is a positive adjustment, and its due to price adjustment on the floor of the exchange within the two years compared
  • The said earnings per share is a 58.37% yield of the price of FCMBH shares on the floor of the exchange when the result was released to the market, this is a higher yield when compared to 40.64% yield estimate of 2018.
  • Estimated Book Value per shares of FCMBH is currently N10.13, the same as 9.40% above the N9.26 of 2018.
  • Thus, Price to Book Value stood at 0.15x as against 0.20x, which simply implies that the stock is currently selling below its book value on the floor of the exchange.
Investment/Valuation Ratios
Tickers 2019 2018 %Chg
EPS 0.88 0.76 15.80
TCIP/SHARE 1.01 0.85 19.10
P/E-Ratio 1.71 2.46 30.36
Earnings Yield 58.37% 40.65% 43.59
BV/Share 10.13 9.26 9.40
PBV 0.15 0.20 26.28

Valuation

  • While trying to place a fair value on each unit of FCMB Holdings shares, we considered the average of two valuation models. FCFE Stable Growth Model valued the stock at N4.48 while H-Model placed the price at N2.00. We, therefore, arrived at an average value of N3.24 for each unit of its shares. Thus, considering the gap between the current market price of FCMBH shares and our fair value, we have rated the Holding Company a Buy.

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