FCMB Loan Cleanup Clears Path for Lending Rebound, Dividend Recovery

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FCMB Group Plc’s overhaul of problem loans is beginning to restore room for credit growth and dividends, even as the Nigerian lender absorbs higher impairment charges and faces risks from restructured exposures.

The banking group’s gross loans returned to growth in the first half of 2026, expanding 4.4% year-to-date after a 3.8% contraction in the first quarter. The recovery reflects deployment of recapitalization proceeds into higher-yielding small and medium-sized enterprise lending, alongside plans to expand retail, consumer, upstream oil and foreign-currency credit.

CardinalStone Research forecasts 10% loan growth for FCMB in 2026, reversing the 0.4% decline recorded in 2025. The brokerage retained a Buy recommendation, with a ₦16.38 12-month price target versus a reference price of ₦12, implying 36.5% upside.

Loan-book cleanup

FCMB’s credit remediation program has materially improved its regulatory non-performing loan position. Under the Central Bank of Nigeria’s prudential framework, the bank’s NPL ratio declined to 5.2% in the first half from 17.0% at the end of 2025.

The improvement followed approximately ₦63.4 billion in write-offs, ₦74.9 billion in customer repayments and roughly ₦67 billion in loan restructurings that are now performing. Nominal NPLs fell 65% year-to-date to ₦108.7 billion.

The regulatory improvement is more substantial than the movement under IFRS 9, where Stage 3 loans declined only 18% year-to-date. That distinction matters because a large Power & Energy exposure was moved from Stage 2 to Stage 3 and now accounts for about half of total Stage 3 loans.

Earnings outlook

Higher asset yields, stronger interest-earning assets and a shift toward more efficient funding are expected to support FCMB’s earnings through the end of the year. Interest…