Here is Vetiva Securities’ analysis of the Q3 results for FCMB. The main issues are shrinking balance sheet and increased provision for loan losses which arent good.

In valuing FCMB, we utilized an Excess Returns Model; assuming a Cost of Equity of 17.00% and Terminal Growth Rate of 4%. A Sensitivity Analysis varying he Discount Factor and Growth Rate scenarios gave a Fair Value range of N7.89 – N8.84.

Checking our valuation with an Adjusted Gordon Growth Model, we derive a valuation for FCMB at 1.26x December 2009F book, with a Fair Value range of N9.32 – N11.63. An average of these valuation methodologies gives a Fair Value range of N8.60 – N10.24. It is our expectation that the stock would trade within this range under normal arket conditions; hence, our “Overweight” rating at current market price of N7.50.