FBN Holdings records 126.8% rise in profit
The FBN Holdings has further consolidated its top-tier ranking with strong performance in the 2023 financial year and the first quarter of 2024, Q1’24, reporting significant growth in gross earnings and pre-tax profit
The grouprecorded N1.6 trillion in gross earnings, about 95.7 percent above the 2022 figure while the profit before tax rose 126.86 percent to N350.59billion during the period.
The Q1’24 result shows even stronger growth performance with gross earning and profit before tax rising 181.43 percent and 325.15 percent respectively despite headwinds propelled by increasing operating costs and foreign exchange impairments.
Analysts believe the CBN’s payment of Heritage Bank’s debt not only signaled a positive outlook for its subsidiary, First Bank, with the reduction of the forbearance balances on FBN Holdings’ books but strengthened its position as a systemically important bank (SIB).
Insiders say that the bank’s performance is testament to the strong leadership provided by erstwhile Group Managing Director, Dr Adesola Adeduntan-led executive management team, who resigned his position in April after serving a record nine years at the helm.
A member of that team has since succeeded him, further affirming a transition that should lead to better outcomes.
Detailed analysis of the group’s results indicates a positive outlook overall as financial ratios continue to improve.
Interest income had a higher contribution at 60 percent relative to 40 percent from non-interest income, reflecting that core operation drove the income growth.
The 153.67 percent growth in non-interest income to N601.70bn was driven by net gains from financial instruments at FVTPL (N246.08bn), net gain on sale of investment securities (N34.85bn) and fee and commission income (N226.45bn). Proshare analysts noted that the commercial banking segment remained the lead gross earnings driver, contributing 94 percent, while merchant bank and asset management contributed six percent.
Macroeconomic factors, notably the persistence of naira depreciation and aggressive rate hikes impacted interest and non-interest growth in Q1 2024.
In addition, the group earned N66.34billion from digital banking in 2023, 20.41 percent higher than N55.10billion in 2022.
On the core operational side, the group’s customer deposits rose by 49.68 percent to N10.66trillion, and deposits from banks increased by 70.88 percent to N1.89trillion in 2023 over the previous year while shareholders’ funds improved by 75.45 percent to N1.75trillion, driven by a 48.09 percent rise in retained earnings, 531.43 percent growth in foreign currency translation reserve, and 35.38 percent in statutory reserve.
Overall the Group’s financial position improved in 2023 as total assets rose by 60.13 percent to N16.94trillion, up from N10.58trillion in 2022.
Improved gross earnings and profitability impacted key valuation metrics as return on average equity (ROAE) and average assets (ROAA) rose to 22.60 percent and 2.30 percent respectively in 2023, up from 14.50 percent and 1.40 percent respectively in 2022.
Similarly, Return on Equity (ROE) and Assets (ROA) grew to 45.40 percent and 4.30 percent, respectively, with the cost-to-income ratio (CIR) falling to 43.10 percent down from 60.40 cent in Q1 2023 implying better cost optimization.
Proshare analysts noted that the positive trend continued with the group’s loan-to-deposit ratio increasing to 62.20 percent above the 65 percent statutory limit, exempting it from discretionary CRR debits.
