FBN Holdings dazzles with bumper harvest

BY EMEKA EJERE

In what is clearly a demonstration of resilience in a the face of several headwinds, FBN Holdings Plc last week reported a profit after tax (PAT) of N32.44 billion for the first quarter ended March 31, 2022.

The sterling performance, which represents a 107.63% growth over N15.620 billion reported in 2021, further amplifies the bewilderment of the Nigerian investing public earlier in the week when the Group released its much-awaited FY 2021 financial statements, with a stellar performance, especially in its banking subsidiary.

Industry analysts saw the impressive 2021 results as signposting a regime of strong fundamentals after a period of restructuring by the leadership of its current management and board. The Q1 2022 results seem to have lent more credence to this position.

Profit before tax (PBT) stood at N36.518 billion as against N8.905 billion in 2021, equally representing 93.16% growth. The profit was boosted largely by interest income of N109.448 billion reported during the period under review as against N78.357 billion posted in 2021, accounting for an increase of 39.67%, the statement showed.

Interest income, however, remained challenged given the moderated interest rate environment negatively impacting yields, with interest income declining 4.1% to N369.0 billion as against N384.8 billion in 2020.

But to mitigate the effect of the low-interest rate on investment securities and revenue generation, the Group remained deliberate with its intensified deposit mobilization and funding strategy to support enhanced loan growth at optimised rates leading to a 5.7% increase in interest expense to N140.8 billion as against N133.2 billion in 2020.

FY 2021

With impressive double-digit growth in the top line and the bottom line, the Group’s audited results for its 2021 financial year no doubt gave the shareholders several reasons to pop Champaign.

Gross earnings rose from N590.66 billion in 2020 to N757.30 billion in 2021. Profit before tax (PBT) doubled by 99.1 per cent to N166.66 billion in 2021 as against N83.7 billion in 2020. Profit after tax grew by 68.4 per cent from N75.6 billion to N151.079 billion. Earnings per share thus increased from N2.45 in 2021 to N4.17 in 2021.

Though, its net interest income declined by 9.3% to N228.2 billion as against N251.6 billion in 2020, its non-interest revenue grew by 96.1% to ₦364.6 billion, up from N185.9 billion it recorded in 2020, on the back of increased fees and commission income, treasury activities and other operating income.

The Group’s deposit from customers also increased by 19.5% y-o-y to N5.9 trillion, up from N4.9 trillion it made in 2020, reaffirming its strong market access and robust funding base.

According to the Group, the growth was a result of its investment in agent banking, digitalisation and deployment of digital platforms improved customer penetration and deepened solid retail franchise. In the period, FBNH’s total assets also grew by 16.2% y-o-y to N8.9trillion, up from N7.7trillion in the previous year.

Its non-performing loan (NPL) ratio further declined to 6.1% against 7.7% in 2020 while coverage its ratio improved to 62.2% from 48.0%. This comes as a great relief to both the shareholders and the regulatory authorities, considering the great threat the burden of NPL had posed before now. A NPLs coming down to 6.1 per cent is a significant progress for the bank when compared to other Tier 1 banks and the regulatory threshold of 5.0per cent.

Analysts also attributed the significant fall in the NPL rates from 40 in 2016 to 6.5 per cent in 2021, to a new culture of corporate governance currently in place in the Group and which has successfully revamped the company’s risk management capabilities.

According to the bank, the recent turnaround and improvement in the NPLs have been a major boost in FirstBank’s quest to improve profitability and reinforce its leadership in the financial services industry in Nigeria.

“I am very proud to have assumed the role of Group Managing Director of this great organisation in January 2022 and I am excited about building on the momentum of recent positive developments”, said Nnamdi Okonkwo, the Group Managing Director, FBNH.

“Our performance over the course of 2021 is reflective of the resilience of the Group and underpins our growth strategy to generate sustainable value for all our stakeholders. As a Group, we are acutely aware of the macroeconomic challenges facing businesses and remain focussed on carefully navigating the environment through innovation and by putting our customers at the centre of our attention.

“In 2022, our strategic focus is on revenue generation through digital channels and retail product offerings, further driving our synergy potential as well as continuing to improve our operating model to deliver more efficiencies”.

In his comment, Dr. Adesola Adeduntan, Chief Executive Officer of FirstBank of Nigeria Ltd said: “Following years of strategic restructuring of the Bank’s balance sheet and operations, the Commercial Banking business is beginning to transition into a sustained growth phase delivering performance commensurate to the size of our business and capabilities of our people. Profit before tax is up 77.9%, gross earnings 30.3%, total assets 15.9% and customer deposits up 19.5%.

“This performance was driven by a relentless focus on the needs of customers and improving the competitiveness of our offerings. We have sharpened our ‘Go To Market’ approach to better leverage the opportunities which our large scale provides in addition to becoming more relevant to our clients by improving our value propositions.

“This performance is also in line with the Bank’s Quantum Profitability Leap agenda which seeks to ensure that we fully maximise the revenue generating capacity of our business to boost the bottom line and fulfil the expectations of all stakeholders in the business.”