Sunday, August 3, 2025
23.7 C
Lagos

FBN Holdings Reports N595bn Earnings in 2017

Mr. UK Eke
Group Managing Director
FBN Holdings Plc

FBN Holdings Plc has rreleased its FY-17 financial result showing gross earnings (+2.27%) grew during the period to NGN595.02 billion, coming only 1.45% above our estimate.

PBT and PAT recorded upturns of 147.63% and 178.78% to NGN56.83 billion and NGN47.79 billion respectively, falling short of our expectation by 13.80% and 11.27% and Bloomberg’s polled estimates by 17.20% and 14.96% respectively.

According to Cordros Capital, the uptick in Gross earnings was buoyed by growth in interest income (+15.87% to N469.59 billion), and fee and commission income (+4.33% to NGN74.45 billion) – both constituting 91% of Gross earnings. Notably, net insurance premium also grew by 1.72% to NGN10.23 billion.

The rise in interest income was driven by improvement in interest earnings on investment securities (+50.22% to NGN173.29 billion) and loans and advances to customers (+6.25% to NGN288.59 billion), which muted the 57.92% decline in interest on loans to banks (NGN7.71 billion). Interestingly, total customers loan book decreased by 3.97% to NGN2 trillion, while loans to banks surged 67% to NG742.93 billion.

The interest expense also increased by 36.92% to NGN138.06 billion in the year — much faster than the 10.23% rise in interest bearing liabilities (IBL) to NGN4.23 trillion – indicative of a more expensive mix in the IBLs. This can be largely attributable to the 32.87% increase in expensive borrowings (9.95% of total IBL: NGN420.92 billion), as against the slower rise in total deposits (90.05% of total IBL: NGN3.81trillion) by 8.19%. As a result, the cost of fund increased by 63 bps to 3.42%.

Expansion in our computed yield on asset for the period by 25 bps to 12.03%, together with the 63 bps increase in cost of fund, translated in the 30 bps dip in NIM to 8.40%.

Meanwhile, significant decline in forex gains by 76.36% to NGN21.06 billion – owing to the 83.16% drop in revaluation gains on the Group’s long forex position – offset the growth in net fee and commission (+3.40%), and the significant upturn in profit on financial instruments at fair value through profit or loss; causing a 34.36% decline in NIR to NGN103.08 billion.

Provision for loan losses recorded its first y/y decline since 2012 (-67.64% to NGN12.30 billion), contracting by 33.45% to NGN150.42 billion. Accordingly, the cost of risk dropped 272 bps to 8.13%. The growth in total loans and advances by 8.52% NGN2.74 trillion and a slower pace of increase in deposits by 8.19% (vs. +12.99% in 2016FY) NGN3.81 trillion, translated to the 22 bps increase in the loan-to-deposit ratio to 72.05%.

The Group’s total opex grew by 7.73% to NGN238.02 billion (slower than the average inflation rate during the year), following a 10.39% and 84.52% rise in other operating expenses and insurance claims respectively. Accordingly, the higher opex, coupled with the 5.34% decline in operating income (NGN444.84 billion) drove the rise in cost-to-income ratio by 649 bps to 53.51%.

The impressive pre and post-tax profits reported benefitted from the low bases of 2015 and 2016 which were dragged by high impairment charges. The lower effective tax rate of 15.91% (vs 2016: 25.31%) also aided growth in the bottom line.

Performance in Q4-17 was also broadly positive, compared to the same period last year, as Gross earnings, PBT and PAT grew by 29.23%, 110.57%, and 142.22% to NGN156.09 billion, NGN1.39 billion, and NGN1.95 billion respectively. Quarter-on-quarter, however, PBT and PAT dropped by 92.97% and 88.10% respectively.

Net interest income (+9.49% y/y; -14.49% q/q) recorded positive growth, with both interest income (+21.78% y/y, -8.24% q/q) and interest expense (+59.91% y/y; +8.66% q/q) posting upticks. Growth in net gain on investment securities (+119.02% y/y; +76.97% q/q) and forex income (+209.93% y/y and +2502% q/q), supported the positive performance in NIR (+80.55% y/y, +78.93% q/q).

Loan impairment charges (+5.76% y/y; +50.19% q/q) and total opex (+7.97% y/y; 6.65% q/q) in the quarter rose to NGN52.84 billion (5.76% higher than our estimate) and NGN62.67 billion (7.97% higher than we expected) respectively.

spot_img
spot_img

Hot this week

SEC: Why We Granted “No Objection” to First Holdco Transaction

The Securities and Exchange Commission (SEC) Nigeria wishes to...

Capital Market to Unlock $500bn Assets via Commodities Exchanges, Warehouses

The Director General, Securities and Exchange Commission (SEC), Dr....

SEC Disowns AGM of Tourist Company of Nigeria, Reaffirms Regulatory Oversight

The Securities and Exchange Commission (SEC) has disowned the...

NCDMB Leads Push for Homegrown Talents at Chevron-funded HCD Graduation

The Nigerian Content Development and Monitoring Board has reaffirmed...

Linkage Assurance Reports 50% Revenue Growth in 2024

L-R: Funkazi Koroye-Crooks, Non-Executive Director; Moses Omoregbe, Company Secretary;...

Topics

NDIC CEO, Bello Hassan, Hosts EFCC Chair, Bawa in Abuja

L-R Managing Director/Chief Executive, Nigeria Deposit Insurance Corporation (NDIC),...

Fidelity Bank Wins Citigroup Excellence Award for Superior Payment Efficiency

Nneka Onyeali-Ikpe Managing Director/CEO Fidelity Bank Plc In recognition of its excellent...

NDIC: Developing Human Capital for Risk-based Supervision

The Nigeria Deposit Insurance Corporation (NDIC) in collaboration with...

Red Hat Appoints Converge Global West African Premier Partner

Red Hat Inc, the world's leading provider of open...

Vodafone Plans First-to-the Market 5G by 2020

In order to be one of the first to...

MTN, FIRS Tango over N330bn Fine Tax

Our attention has been drawn to media reports regarding...

NAICOM Chief, Segun Omosehin, Hosts Nigerian Factoring Group

The CFI/CEO of NAICOM, Mr. Segun Omosehin recently hosted...
spot_img

Related Articles

Popular Categories

spot_imgspot_img