FBN Holdings grosses to N439.2bn in 9months

…Commercial Banking business contributed 90.4% to gross earnings

FBN Holdings Plc. announced its 9 months unaudited results on Thursday, declaring N439.2 billion as gross earnings.

The result released for the nine months period ended 30 September 2017, showed gross earnings was up 5.2% from N417.4bn declared in the same period of 2016.

The financial institution’s income statement revealed that Net-interest income of N254.3bn, was up 25.3% from N202.9bn recorded in September, 2016.

N74 billion was realised as Non-interest income. This was 43.5 percent lower than N131.0bn declared one year ago.

Bottom line closed 7.8 percent higher than previous year as Profit after tax of N45.8 billion, increased from N42.5bn declared as profit after tax in 2016.

The group’s statement of financial position showed total assets of N4.9 trillion, was up 2.7% year-to-date (y-t-d) but Customer deposits closed 5.3 percent lower than figure obtained in December 2016 at N3.0trn, down 5.3% y-t-d.

Key financial Ratios computed on the 9month performance revealed Post-tax return on average equity increased to 10.1% from 9.4% obtained in 2016. Post-tax return on average assets increased marginally to 1.3% from Sept 2016’s 1.2% value and Net-interest margin stood at 8.8% compares to 7.5% in 2016.

Cost to income ratio, however, rose to 53.4% from 48.4% while NPL ratio of 20.1% was lower than 24.9 percent obtained in Sept 2016.

In his review of the group’s financial performance for the period, UK Eke, MFR, the Group Managing Director said: Gross earnings growth of 5.2% y-o-y to N439.2bn from Sept 2016’s N417.3bn, was driven largely by a 27.8% y-o-y growth in interest income.

“This was partly offset by a 43.5% y-o-y decline in non-interest income. Interest income and non-interest income contributed 81.3% and 18.7% respectively. The growth in interest income to gross earnings was driven by increased investment in securities. Net-interest income improved by 25.3% y-o-y to N254.3bn (Sept 2016: N202.9bn), driven by a 27.8% y-o-y increase in interest income to N356.1bn (Sept 2016: N278.6bn), and by improved yields on interest earning assets and continuous optimisation of the loan book.
However, these achievements were partly offset by a 34.4% y-o-y increase in interest expense to N101.7bn (Sept 2016: N75.7bn) resulting from the high interest rate environment.”

Eke revealed that Cost of funds increased to 3.5% (Sept 2016: 2.7%), mainly on the back of the high interest rate environment and the impact of the MPR-indexed pricing on our savings deposits. Notwithstanding, the Group continued to optimise its balance sheet and achieved stronger blended yield on interest earning assets of 12.3% (Sept 2015: 10.2%). Consequently, net-interest margin increased to 8.8% from 7.5% in prior period.

Non-interest income (NII) declined by 43.5% y-o-y to N74.0bn from N131.0bn in the prior period, driven by the base effect on Foreign exchange income (including FX revaluation gains).

Meanwhile, Foreign exchange income declined to N5.6 billion compared to Sept 2016: N68.4bn, representing 7.6% of non-interest income against 52.2% in the prior period. Excluding FX revaluation gains of the previous year, NII inched up by 2.0%. Fees and commission (F&C) income, representing 73.3% (Sept 2016: 40.2%) of total non-interest
income, increased by 3.0%y-o-y to N54.3 billion (Sept 2016: N52.7 billion).

Speaking on the Bank’s results Dr. Adesola Adeduntan, the MD/CEO of FirstBank and subsidiaries said:
“On the back of a stronger balance sheet and despite the challenging, but improving economic environment, the commercial banking group delivered a 4.5% y-o-y growth in gross earnings – a testament to its resilient revenue generation capabilities.

“To further support future revenue generation and in line with our strategic imperatives to reposition the commercial banking business, we are expanding our digital banking initiatives and transforming our business model to increase customer acquisition and retention, providing a renewed customer experience. To improve profitability in a sustainable way, the Group is increasingly optimising its cost base, leveraging on technology.
In addition, good progress is being made in strengthening the credit processes end to end and improving the quality of the loan book while resolving the legacy assets.”
He noted that the Commercial Banking business contributed 90.4% to gross earnings of the Group compared to 91 per cent in Sept 2016, and 78.8% (Sept 2016: 77.8%) to its profit before tax.