Review of FCMB FY 2023 results- By Kalu Aja

FCMB, Nigeria’s first local bank to be established without government support, has recently released its financial year 2023 results.

The bank has been making significant strides in its operations, which the market has not fully reflected in its pricing yet.

The bank’s gross revenue has increased by 82.5% to N516b, driven by non-interest income, with the bulk of earnings coming from core banking, investment banking, and consumer finance. In addition, net interest income has increased by 44% to N122b, driven by higher asset yields, achieving net profit margins of 37.9%.

Moreover, the bank has seen a 54% increase in loans to N1.84 trillion One of the key factors behind this growth is the innovative use of AI in lending.

FCMB has deployed an instant loan product called FastCash, which provides personal loans without collateral and has approval times of less than 5 minutes. This technology has enabled the bank to disburse 1.5m individual loans to individuals, microenterprises and SMEs.

The bank has also transitioned 160 banks to solar power, representing 78% of the bank business locations running on solar.

The bank’s digital banking services have also been instrumental in improving efficiency and customer satisfaction, with digital revenues from Payments, Wealth Management, and Lending growing by 62.4%. This technology-driven ecosystem has enabled the bank to reduce its cost to income ratio to 66%.

Overall, FCMB’s numbers, deposits, and profit after tax (PAT) look promising. In 41 years, FCMB has built a financial supermarket with banking, investment banking, occupational pensions management, trustees, digital banking, and lending, with a UK franchise.

Its earnings per share are N4.82, and it is trading at 1.5x its earnings, which is cheap compared to the industry’s PE average of 7.2. However, the bank needs to recapitalize to meet new CBN guidelines and improve its dividend yield, currently at 3.5%.

In summary, the bank’s focus on digital banking, green banking, and AI in lending is starting to pay dividends in cost reduction and new business, and the bank’s performance is expected to improve in the future.

Please note that this article is educational and not intended nor should it be relied upon as investment advice.