FCMB Holdings 2020Q3: Improved EPS, But Loans Grow Slower Than Deposits

Rating: Hold
Current Market Price: N3.08
Loan-Deposit Ratio: 61.63%

Year High: N3.99
Year Low: N1.41
Fair Value: N3.24

Equity Analyst: Tunde Segun Jeariogbe

Key Investment Ratios

  • This report observed the financial performance indices of FCMB Holdings for the period ended 30th September 2020; compared the same with figures for the corresponding quarter in 2019 to establish growth.
  • Loan to Deposit ratio was estimated at 61.63%, as against 66.88% in the corresponding quarter.
  • Generally, the result released for the first nine months of 2020 is a fair improvement over the comparable quarter of 2019. In our opinion, this is a commendable performance given the challenging environment within which it operated in both periods.
  • Nevertheless, we have maintained a conservative valuation approach for each unit of FCMB-Holdings listed shares
  • See below for detailed analysis and comparison of ratios
BourseNigerian Stock Exchange
Code NameFCMB
Market ClassificationMAINBOARD
Nature of BusinessProvision of banking and other financial services to corporate and individual customers
Date of IncorporationNovember 20th, 2012
Date ListedJune 21st 2013
End of Accounting Year31st December
Share Price@Relsd (N)                                                         3.01
Earnings per Share                                                         0.70
Intrinsic Value(N)                                                         3.24
Share Outstanding19,802,710,754
Market Capitalisation                                       59,606,159,370
Source: Company, NSE and Investdata Research

Company figures

  • Gross Earnings at the of the quarter is estimated at N146.42 billion, same as 7.81% marginal growth above the N135.82 billion achieved at the end of 2019 third quarter.
  • Interest Income stood at N112.09 billion, versus N101.80 billion at the end of 2019 nine months.
  • Interest Expenses dropped marginally to N44.04 billion as against N45.74 billion in 2019.
  • Thus, Net Interest Income is valued at N68.05 billion, as against N56.06 billion in the corresponding quarter.
  • Operating Expenses adjusted up by a marginal 3.71% to N60.38 billion, as against N58.22 billion in same period of 2019.
  • Profit before Tax improved by 23.79% to N15.84 billion, against N12.80 billion in the comparable quarter.
  • After accounting for Tax Expense, the management of FCMBH achieved N13.90 billion as profit for the third quarter of 2020, 28.84% above the N10.79 billion of the 2019 nine months.
  • Similarly, Total Comprehensive Income stood at N16.94 billion, same as 131.79% above the N7.30 billion in 2020.
Statement of Comprehensive Income
GROSS EARNINGS               146,425,540,000           135,823,603,0007.81
INTEREST INCOME               112,098,335,000           101,801,561,00010.11
INTEREST EXPENSES                 44,045,534,000              45,740,299,0003.71
NET INTEREST INCOME                 68,052,801,000              56,061,262,00021.39
OPEX                 60,381,756,000              58,220,009,0003.71
DEPRECIATION                    5,488,257,000                4,803,748,00014.25
PBT                 15,849,684,000              12,803,225,00023.79
TAX                    1,946,513,000                2,011,820,0003.25
PAT                 13,903,171,000              10,791,401,00028.84
TOTAL COMP INCOME                 16,941,921,000                7,309,147,000131.79
Statement of Financial Position
Total Assets           2,037,569,716,000        1,516,154,864,00034.39
Total Liabilities           1,822,737,560,000        1,328,190,991,00037.23
Net Assets               214,832,156,000           187,963,873,00014.29
Property Plan & Equipment                 46,630,776,000              42,448,601,0009.85
Retained Earnings                 45,272,624,000              35,788,312,00026.50
Total Deposits           1,287,040,977,000           954,077,818,00034.90
Total Loans and Advances               793,140,925,000           638,064,793,00024.30
Source: Company, NSE and Investdata Research
  • Total Assets was N2.03 trillion, 34.39% above the N1.51 trillion valued in the similar quarter.
  • Total Liabilities on the other hand stood at N1.82 trillion, as against N1.32 trillion in 2019.
  • Net Assets is currently valued at N214.83 billion, versus N187.962 billion in 2019.
  • Retained Earnings stood at N45.27 billion, same as 26.50% above the N35.78 billion stated in the bank’s books 2019.
  • Total Deposits received by FCM Holdings stood at N1.28 trillion, 34.90% higher than the N954.07 billion deposit in 2019
  • Meanwhile, Total Loans and Advances improved by 24.30% at N793.14 billion, versus N638.06 billion in the corresponding.

Financial Strength/Solvency Ratios

  • Ratio Estimates confirmed that the total Liabilities is same as 89.46% of the Financial Institution’s Assets valuation for the period, about same as the 87.60% estimated in the corresponding quarter.
  • Thus, it was established that Total Debt used through the first nine months of 2020 can replicate Equity value 8.48 times, which is mildly above the 7.07 times replicate in the comparable quarter
  • We also compared the relationship between the holding company’s Equity to its Asset, and established that Equity is only 10.54% of Total Assets value at the end of the quarter. This is a reduced risk on the part of equity holders
  • Estimated Beta value for FCMBH as at the time this report was compiled stood at 1.09, which is above-market beta, but fairly below the estimated industrial average.
Financial Strength/Solvency Ratio
Debt Ratio89.46%87.60%2.12
Total Debt to Equity Ratio (MRQ)                                       8.48                                   7.0720.07
Equity Ratio10.54%12.40%14.95
Beta Value                                       1.09                                   1.111.80
Source: Company, NSE and Investdata Research

Profitability Ratios

  • Pre-Tax Margin improved by 14.83% to 10.82% from the 9.43% estimated at the end of the similar quarter in 2019.
  • Interest Expenses to Gross Earnings dipped by 10.68% to 30.08% from the previously estimated 33.68%.
  • Return on Average Equity, at the end of the quarter, was estimated at 6.47% compared to the prior 5.74%.
  • See the table below for detailed profitability ratios and comparison:
PRE-TAX MARGIN10.82%9.43%14.83
EFFECTIVE TAX RATE12.28%15.71%21.84
IE TO GE30.08%33.68%10.68
Source: Company, NSE and Investdata Research

Efficiency Ratios

  • Operating Expenses to Gross Earnings Ratio stood slightly below that of the corresponding quarter by a marginal 3.80% after moving from 42.86% to 41.24%. This is a marginal improvement in management efficiency.
  • Gross Earning is the same as 7.19% of the Total Assets value at the end of the quarter. This is 19.78% below the 8.96% estimated at the end of 2019 third quarter business session.
  • It was equally established that 61.63% of the total deposits for the period were given out as loans and advances to customers, which is 7.85% below the 66.88% of deposit given out as loans and advances through 2019 nine monhts business session.
OPEX TO GE41.24%42.86%3.80
GE TO TA7.19%8.96%19.78
Source: Company, NSE and Investdata Research

Investment/Valuation Ratios

  • At the end of the quarter, N0.70 was earned on each unit of FCMBH shares listed on the floor of the Nigerian Stock Exchange, better than the N0.54 reported at the end of the comparable period in 2019.
  • On the other hand, Total Comprehensive Income per share is currently estimated at N0.86/share which is 131.79% above the N0.37 earned in 2019.
  • Going by our nine months adjusted PE-Ratio, the price of FCMBH at the time of this report can replicate the earnings per share 1.43 times, higher than the 1.23x estimated in 2019.
  • The said earnings per share is a 23.33% yield of the price of FCMBH shares on the floor of the exchange when the result was released to the market, this is a lower yield when compared to 27.11% yield estimate of 2019.
  • Estimated Book Value per shares of FCMBH is currently N10.85, the same as 14.29% above the N9.49 of 2019.
  • Thus, Price to Book Value stood at 0.28x as against 0.21x, which simply implies that the stock is currently selling below its book value on the floor of the exchange.
Investment/Valuation Ratios
Earnings Yield23.33%27.11%13.97
Source: Company, NSE and Investdata Research


  • 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 company a Hold.