Quarter Under Review: FULL YEAR 31ST DECEMBER 2025
Current Share Price: N12.00
Price At Released: N12.00
Latest Final Dividend: N0.35
Latest Interim Dividend: NIL
Estimated Beta Value: 0.42x
Estimated Intrinsic Value: N17.45
Rating: Moderate Buy-Long & Short Term
Analyst: Jeariogbe Tunde Segun
The Bank
FCMB Group Plc traces its roots to First City Merchant Bank, founded in 1982 by Otunba Michael Subomi Balogun, evolving into one of Nigeria’s leading financial services holding companies over the years with interests across banking and non-banking financial services.
The Group operates through several key business segments, including Commercial and Retail Banking, Corporate Banking, Institutional Banking, Investment Banking, Treasury & Financial Markets, Investment Management, and Consumer Finance, serving individuals, SMEs, Corporates, Governments, and Financial Institutions.
Regarding the current banking recapitalisation exercise, FCMB has made significant progress, raising ₦144.6 billion through a public offer, which helped it meet the Central Bank of Nigeria (CBN) requirements for a National Banking Licence.
However, the Group has hinted of plans for additional capital raising to meet the ₦500 billion minimum capital needed for an International Banking Licence, meaning FCMB’s recapitalisation process is not yet fully completed.
The Released Numbers
FCMB Group Holdings Plc (FCMBH) delivered a strong financial performance in the 2025 full-year with gross earnings rising by 42.5% to ₦1.13 trillion from ₦794.43 billion in the corresponding period of 2024. Of this amount, Interest income grew significantly by 61.7% to ₦1.01 trillion, reflecting improved asset yields and loan book growth. Despite a 26.0% increase in interest expenses to ₦499.42 billion, net interest income more than doubled, increasing by 124.6% to ₦505.91 billion, demonstrating the Group’s ability to expand earnings faster than funding costs.
Operating expenses increased by 44.6% to ₦311.18 billion, while depreciation and amortisation rose by 24.8% to ₦17.32 billion. However, the growth in operating costs was well contained relative to revenue expansion, resulting in a robust improvement in profit. Profit Before Tax (PBT) surged by 80.6% to ₦202.10 billion from ₦111.90 billion in the prior year. The Group also benefited from a lower tax charge of ₦24.83 billion compared to ₦38.56 billion in 2024, further supporting earnings growth.
Consequently, Profit After Tax (PAT) rose sharply by 141.7% to ₦177.27 billion from ₦73.34 billion, underscoring a remarkable improvement in overall performance. Total Comprehensive Income also increased by 48.4% to ₦154.04 billion, reflecting strong earnings generation despite a challenging operating environment. Overall, the 2025 results highlight FCMB Group’s resilience, strong revenue growth, enhanced profitability, and improved shareholder value creation.
FCMB Group’s financial position remained strong in 2025, with total assets increasing by 8.2% to ₦7.63 trillion from ₦7.05 trillion in 2024. Total liabilities also grew by 6.8% to ₦6.79 trillion, driven largely by an expansion in customer deposits. As a result, net assets (shareholders’ funds) rose significantly by 21.4% to ₦836.41 billion, reflecting strong earnings retention and capital growth during the year.
The Group continued to strengthen its funding base, with total deposits increasing by 5.8% to ₦5.43 trillion from ₦5.13 trillion in the previous year. Retained earnings grew by 18.6% to ₦223.51 billion, underscoring the impact of improved profitability on shareholders’ equity. Property, Plant and Equipment also increased by 13.2% to ₦63.36 billion, indicating continued investment in infrastructure and operational capacity.
Asset quality improved during the year as Stage 3 loans (non-performing loans) declined by 14.9% to ₦125.95 billion from ₦147.98 billion in 2024. Total loans and advances remained relatively stable at ₦2.37 trillion, while total gross loans (Stage 1, Stage 2 and Stage 3) stood at ₦2.48 trillion. The reduction in Stage 3 exposures despite sustained loan growth reflects enhanced credit risk management and a healthier loan portfolio, further strengthening the Group’s overall financial position.
Financial Strength/ Solvency Ratio
FCMB Group’s solvency profile improved in 2025, reflecting stronger capitalization and reduced leverage. The Debt Ratio declined to 89.04% from 90.23% in 2024, while the Debt-to-Equity Ratio improved to 8.12x from 9.24x, indicating that the Group relied less heavily on liabilities relative to shareholders’ funds. Correspondingly, the Equity Ratio increased to 10.96% from 9.77%, demonstrating a stronger equity base and enhanced capacity to absorb potential financial shocks.
Asset quality also strengthened during the year, as the Non-Performing Loan (NPL) Ratio declined to 5.09% from 5.95%, representing a 14.6% improvement. The lower NPL ratio reflects better credit risk management, improved loan recoveries, and a healthier loan portfolio. Overall, the improvement in leverage, capital structure, and asset quality underscores FCMB Group’s growing financial resilience and reinforces its ability to support future business growth while maintaining prudent risk levels.
Profitability Ratios
FCMB Group’s profitability strengthened significantly in 2025, driven by robust earnings growth and improved returns to shareholders. Return on Equity (ROE) nearly doubled to 21.19% from 10.64% in 2024, while Return on Assets (ROA) increased to 2.32% from 1.04%. These improvements indicate that the Group generated substantially higher profits from both shareholders’ funds and its asset base, reflecting enhanced operational performance and effective deployment of resources.
The Group also recorded notable improvements in cost and funding efficiency. Interest Expense to Gross Earnings (IE to GE) declined to 44.13% from 49.91%, demonstrating better management of funding costs despite a high-interest-rate environment. Similarly, the Effective Tax Rate reduced significantly to 12.29% from 34.46%, contributing positively to net earnings growth and supporting the substantial increase in Profit After Tax recorded during the year.
While profitability improved markedly, margin indicators presented a mixed picture. EBIT Margin moderated slightly to 63.51% from 65.74%, suggesting that operating costs grew alongside revenue expansion. However, the Pre-Tax Margin improved to 17.86% from 14.08%, reflecting stronger earnings generation before taxation. Overall, the profitability ratios indicate that FCMB Group delivered a stronger financial performance in 2025, characterized by higher returns, improved cost efficiency, and enhanced value creation for shareholders.
Efficiency Ratios
FCMB Group’s efficiency ratios present a mixed but generally positive picture for 2025. The Operating Expenses to Gross Earnings ratio (OPEX to GE) increased slightly to 27.49% from 27.09% in 2024, indicating that operating costs grew marginally faster than revenue. However, the Gross Earnings to Total Assets ratio (GE to TA) improved significantly to 14.83% from 11.26%, reflecting stronger asset utilization and an enhanced ability to generate revenue from the Group’s asset base. This improvement aligns with the substantial growth recorded in gross earnings during the year.
The Loan-to-Deposit Ratio (LDR) declined to 43.58% from 45.94%, suggesting a more conservative lending position and stronger liquidity profile, although it may also indicate room for greater loan expansion. Meanwhile, Capital Expenditure per Share (Capex/Share) rose sharply to 0.11 from 0.05, reflecting increased investment in infrastructure, technology, and business expansion initiatives. Overall, FCMB maintained operational efficiency while improving asset productivity and strengthening its capacity for future growth through higher capital investment.
Investment/Valuation Ratios
FCMB Group’s investment and valuation metrics improved considerably in 2025, reflecting stronger earnings growth and increased investor confidence. Earnings Per Share (EPS) rose by 45.2% to ₦2.69 from ₦1.85 in 2024, driven by the substantial growth in profit after tax. Consequently, Earnings Yield increased to 22.40% from 20.46%, indicating that shareholders earned a higher return relative to the market price of the stock and reinforcing the attractiveness of the Group’s earnings profile.
Market valuation indicators also showed positive momentum during the year. The Price-to-Earnings (P/E) Ratio declined slightly to 4.46x from 4.89x, suggesting that the stock remained relatively inexpensive compared to its earnings despite the strong improvement in profitability. Meanwhile, the Price-to-Book Value (PBV) ratio increased significantly to 0.95x from 0.52x, indicating that the market placed a higher value on the Group’s net assets and future growth prospects. The increase in PBV reflects improving investor sentiment and stronger market recognition of the Group’s underlying value.
On the other hand, Total Comprehensive Income Per Share (TCIP/Share) declined by 10.9% to ₦2.34 from ₦2.62, while Book Value Per Share (BVPS) decreased to ₦12.68 from ₦17.40. Despite these declines, the sharp improvement in earnings, attractive earnings yield, low P/E ratio, and higher PBV suggest that FCMB Group remained fundamentally attractive from an investment perspective. Overall, the valuation ratios indicate a company with improving profitability, growing market confidence, and potential upside for long-term investors.
Dividend
FCMB Group’s 2025 dividend metrics reflect a more conservative capital distribution policy, likely influenced by the ongoing banking sector recapitalization exercise and the need to retain earnings for future growth. The proposed final dividend declined by 36.4% to ₦0.35 per share from ₦0.55 per share in 2024, while the final dividend payout ratio fell significantly to 13.02% from 29.70%. Consequently, the final dividend yield decreased to 2.92% from 6.08% in the previous year. Despite the reduction in dividend payouts, the Group’s strong earnings growth and increased earnings retention have strengthened shareholders’ funds and positioned the company to support future expansion, regulatory capital requirements, and long-term value creation for shareholders.
Final Verdict/Investment Recommendations/Ratings
FCMB Group delivered an impressive financial performance in 2025, characterized by strong growth in earnings, profitability, and shareholders’ funds. Gross earnings increased by 42.5%, Profit Before Tax rose by 80.6%, while Profit After Tax surged by 141.7%, demonstrating the Group’s ability to capitalize on the prevailing high-interest-rate environment. Asset quality also improved, with the Non-Performing Loan Ratio declining to 5.09% from 5.95%, while the balance sheet remained solid with net assets growing by 21.4% and deposits increasing by 5.8%. These results reflect a financially resilient institution with improving operational efficiency and strengthening risk management.
From an investment perspective, FCMB’s valuation remains attractive despite the significant appreciation in its earnings profile. The stock trades at a relatively low P/E ratio of 4.46x, offers a strong earnings yield of 22.4%, and recorded substantial improvements in ROE and ROA. Although the dividend was reduced due to earnings retention and capital preservation efforts, this should be viewed positively in light of the ongoing banking sector recapitalization exercise. The Group’s decision to retain a larger portion of earnings strengthens its capital base and enhances its ability to pursue future growth opportunities while meeting regulatory requirements.
Overall, FCMB Group exhibits strong fundamentals, improving asset quality, robust profitability, attractive valuation metrics, and a strengthened capital position. The key risks remain the moderate NPL ratio, funding cost pressures, and the need to complete its transition toward higher capitalization levels. However, these risks are outweighed by the Group’s earnings momentum and improving financial strength. Therefore, my investment recommendation is a BUY for medium- to long-term investors. On a scale of 1 to 5, FCMB earns a rating of 4.5/5 (Strong Buy), supported by its growth prospects, attractive valuation, and potential for enhanced shareholder value as the recapitalization process progresses.
