Saturday, July 12, 2025
24.2 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
spot_img

Hot this week

Fidelity Bank Delivers Hope to Internally Displaced Persons in Benue State

Team Lead, CSR, Fidelity Bank Plc, Victoria Abuka (Left);...

Union Bank Responds to Court Ruling on NICON, Global Fleet, Jimoh Ibrahim Case

Union Bank of Nigeria acknowledges the recent judgment of...

NAICOM, CIIN Laud IMT for Advancing Tech-Driven Insurance in Nigeria

The Commissioner for Insurance (CFI) and the CEO of...

NCDMB Unveils Nigerian Content Fund Certificate, Empowers 130 firms with $400m NCI Fund

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

Local Content, NCDMB on the Spotlight at 2025 NOG Conference

The recently held 2025 Nigeria Oil and Gas (NOG)...

Topics

Emirates Launches Air Bridge to Lebanon, Global Humanitarian Campaign

Airline will enable people around the world to donate...

NLNG Unveils New Logo in Rebranding Move

Nigeria LNG Limited (NLNG) has unveiled a new logo...

FG Plans Lower Taxes for SMMES to Stimulate Economy

The Federal Government is set to reduce the income...

TSA: CBN Sanctions UBA N2.9bn, First Bank N1.8bn

These are bad times for United Bank for Africa (UBA) Plc and First Bank Limited as both were sanctioned by the Central Bank of Nigeria (CBN) to the tune of N2.9 billion and N1.8 billion respectively for allegedly violating the Treasury Single Account (TSA) policy of the Federal Government. For First Bank, its shares nosedived to 10-year low as a result of the N1.88 billion sanction by the CBN. The bank’s shares fell by 3.9% to N5 in trading at the Nigerian Stock Exchange (NSE), its lowest fall since April 2005.

Nigeria Under Pressure as Oil Freeze Talks Collapse

Nigeria and other African economies that depend solely on...

Hero Lager Presents Echefula, Never Forget Your Identity

Hero lager, a leading quality beer brand from the...
spot_img

Related Articles

Popular Categories

spot_imgspot_img