FCMB: High impairment charge dents impressive Q1 results (Key highlights)

FCMB Plc released its 2015 Q1 results showing pre-tax profits rose 10% to 3.5% to N5.7billion. Here are the key highlights of the results.

• Net interest income rose 10.6% to N18billion indicating that the bank is till growing a key segment of its revenues.
• However, the Net Interest Income is significantly lower than the N23.5billion it posted the quarter before (Q4’14).
• Non interest income rose slightly by 5% to N6.3 billion suggesting that the bank experienced little growth in foreign exchange income. Most Nigerian Banks earned significant earnings increase following the devaluation of the naira.
• Operating expenses also rose 6% to N16 billion and below the average of Tier 1 banks and within range of its peers.
• Impairment charges however rose to N2.1 61% higher than same period in 2014.
• This huge charge follows the N6.7 billion hit it took in Q4 of 2014.
• Loan impairment this quarter is now 26% of operating income. Stanbic and Diamond also have high Loan impairment to operating income of 45% and 43% respectively.
• A higher percentage in our view reveals how much loan losses impact on  shareholders returns at any given period. A percentage below 15% is fair enough.
• Growth in Loans and advances dropped under 6% indicating that the bank will like to keep capital adequacy ratio at the current 20.6% levels to avoid any need to raise expensive capital.
• FCMB closed trading Friday at N3.37 and is still relatively undervalued by our estimates.
• FCMB has risen 20.3% in the last one month and is still down 17.6% from its 6 months high.