FBN Holdings posted a better-than-expected financial performance in the first six months of 2020, growing post-tax profit by more than half.
The group’s profit-after-tax increased 56.3 per cent to ₦49.5 billion, compared to ₦31.6 billion in the corresponding period last year and Profit before tax grew 14.3 per cent to ₦41.4 billion, its financial statement released on Wednesday showed.
The financial group grew gross earnings by 5.8 per cent to ₦296.4 billion (Jun 2019: ₦280.3 billion ), buoyed by 46.8 per cent rise in non-interest income to ₦80.1 billion, though net-interest income dipped 7.4 per cent to ₦131.3 billion in H1 2020.
Also, operating income by 7.7 per cent to ₦211.4 billion with impairment charge for credit losses went up 38.6 per cent to ₦30.7 billion, compared to ₦22.1 billion in H1 2019.
Meanwhile, Operating expenses only appreciated by 0.9 per cent to ₦139.2 billion during the period under review, instead of ₦137.9 billion in the prior period last year.
Its total assets improved by 14.9 per cent to ₦7.1 trillion (Dec 2019: ₦6.2 trillion), customer deposits increased 8.8 per cent to ₦4.4 trillion and customer loans and advances was higher by 7.7 per cent to ₦2.0 trillion in the first six months of this year.
While post-tax return on average equity stood compared to 11.6 per cent in June 2019, post-tax return on average assets was 1.5 per cent in H1 2020 and net-interest margin lowered to 6.8 per cent.
FBNH improved cost to income ratio declined to 65.8 per cent instead of 70.3 per cent in June 2019 and non-performing ratio also improved to 8.8 per cent, compared 9.9 per cent of December 2019.
FirstBank Nigeria Basel 2 Capital Adequacy Ratio increased to 16.5 per cent (Dec 2019: 15.5%), while FBNQuest Merchant Bank Basel 2 CAR stood at 17.2 per cent (Dec 2019: 17.1 per cent).
UK Eke, the Group Managing Director of FBN Holdings explained that: “The H1 2020 financial results are impressive and reconfirm our consistent focus on enhanced shareholder value. Despite the difficult operating environment, the H1 results demonstrate our resilience and capacity to deliver on long-term ambitions.
“The 56.3% y-o-y growth in profit after tax for the period is a testament to the strength of our organisation to continually deliver exceptional services to our customers in these unprecedented times. We have been able to achieve this feat by leveraging our agent banking network, innovative e-banking capabilities, and operational efficiency utilizing technology.
“During the quarter, we successfully divested from the underwriting (insurance) businesses to focus on our banking operations. We are confident this will enhance greater value to our stakeholders and strengthen the Group’s resolve to consolidate its leadership of the banking sector. Following the divestment, FBNHoldings injected Tier 1 capital into FirstBank, effectively increasing its CAR to 16.5%. “This provides a comfortable buffer against regulatory requirements with the potential to support any emerging business opportunities.
Looking ahead, we remain cautious, but we are confident that our business is fundamentally strong to withstand any future challenge towards enhanced performance.”
Commenting on the results Dr. Adesola Adeduntan, the Chief Executive Officer of FirstBank and its subsidiaries said:
“Over the period, the commercial banking group increased its y-o-y growth in gross earnings and profit before tax by 6.1% and 9.2% respectively, despite the economic shutdown during the quarter and varying degrees of challenges in the operating environment. Notwithstanding, we have continued to provide services to our customers with minimal disruption in a safe environment, supported by seamless transactions through our increasing agent banking network and digital platforms (FirstMobile and USSD). Furthermore, continuous focus on operational efficiency remains a priority, as improvement in non-performing loan ratio has further been sustained.
As the economy reopens gradually, in Nigeria and other key markets as in the rest of the world, we are adopting a pragmatic approach with optimism on propelling our performance for enhanced profitability through customer-led innovation and disciplined execution.”