First Bank of Nigeria Holding (FBNH) yesterday released one of the strongest results of bank holding companies within its peer group.
The audited results for the full year ended December 2014, showed a sizzling growth in after-tax profit of 17 per cent rising from N70.6 billion in 2013 to N82.8 billion in the last financial year.
The bank holding company grew its gross earnings, a measure of its business expansion, by 21.3% year-on-year from N396.2 billion in 2013 to N480.6 billion in 2014.
The bank’s core business showed robustness in underlying spread between net interest income and net interest expenses with net interest income settling a towering N243.9 billion, up 6.0 per cent year-on-year (as against December 2013’s figure of N230.1 billion).
Investors therefore earned an impressive N2.55 per share in 2014 as against an equally strong N2.16 in 2013, representing earnings per share growth of 18 per cent or twice the rate of projected annual inflation for 2015.
The Holding company’s audited 2014 annual account also showed that FBNH’s Non-interest income went up by 66.1 per cent year-on-year from N67.3 billion to N111.8 billion, while operating income helicoptered to N355.1 billion or 19.8% year-on-year as against the December 2013 result of N296.4 billion.
Consequently, the company has proposed a dividend of 10 kobo per share representing a dividend yield of 1.1 per cent in addition to a bonus of one new share for every 10 shares held, representing an additional 10 per cent investment return to existing shareholders.
This contrasts positively against the equally impressive dividend of N1.05 paid in 2013.
“Profit before tax stood at N92.9 billion (December 2013: N91.3 billion), up 1.7% y-o-y. Income tax expense for the year was N10.0 billion (December 2013: N20.7 billion). This improved the effective tax rate to 10.8% from 22.7%.
This was primarily driven by an increase in the tax exempt income from utilising available capital allowances. This performance translates into pre-tax return on average equity of 18.7% (December 2013: 20.0%) and post-tax return on average equity of 16.7% (December 2013:15.5%),” the summary of the result release by the group stated.
Commenting on the result, the Group Chief Executive Officer, Mr. Bello Maccido said despite its challenging operating environment, FBN Holdings was able to post a sterling financial performance.
The FBN Holdings boss opined: “The Group recorded a strong financial performance in 2014, in spite of the highly challenging operating environment particularly for our flagship business, First Bank of Nigeria. As such, the performance by the Banking Group is a testament to the underlying strength of our commercial banking business which is built on an extensive retail network and a robust information technology platform. Notwithstanding the tough operating environment, the Group showed commendable growth across all the key performance indicators buoyed by the complementary performance of our non-bank subsidiaries with gross earnings growing by 21.3% to N480.6 billion and Profit before tax at N92.9 billion
“We remain focused on diversifying our revenue streams through the extraction of value from our recent bank acquisitions, consolidating our position in the investment banking space, especially with the acquisition of Kakawa, and expanding our insurance business scope.
Our investment in technology, human capital and portfolio expansion are beginning to shape the long-term fundamentals of the Group and will deliver a positive return on investment over the longer term.
However, in the short to medium term we continue to ensure our business remains as resilient as can be to the shifts in the regulatory and macro-economic environment; shore up our risk management processes; and, drive efficiencies across the Group.”
The group Impairment charge for credit losses of N25.9 billion was up 27.7% year-on-year from N20.3 billion. Its operating expenses also swelled by 27.5% to N236.8 from N185.8 billion in 2013.
The company’s total assets rose to N4.3 trillion, up 12.2% year-on-year (against December 2013: N3.9 trillion). Customer deposits of N3.1 trillion, up 4.2% year-on-year (December 2013: N2.9 trillion). Customer loans and advances (net) of N2.2 trillion, up 23.2% year-on-year (December 2013: N1.8 trillion)
Pre-tax return on average equity stood at 18.7% (December 2013: 20.0%); post-tax return on average equity of 16.7% (December 2013: 15.5%). Net interest margin of 7.6% (December 2013: 8.0%). Cost to income ratio (CIR) rose to 66.7% (December 2013: 62.7%). Non Performing Loan ratio declined to 2.9% (December 2013: 3.0%). The Banking group’s liquidity ratio was 44.0% in FY’14 (December 2013: 44.2%) .
FBN Holdings completed the acquisition of 100 per cent equity of Kakawa Discount House Limited (Kakawa), which is now a direct subsidiary of FBNH.
FBN Insurance Limited also acquired 100% equity interest in Oasis Insurance Plc. FirstBank acquired ICB Senegal to complete the acquisition of the International Commercial Bank’s (ICB) West African operations. FirstBank concluded a US$450 million subordinated Tier 2 debt issuance in the international markets for general banking purposes.