FBN Holdings Plc has announced a profit of N89.7 billion in its audited result for the financial year ended December 31, 2020.
This represents 21.8 percent increase from N73.7 billion achieved in the comparative period of 2019, according the result released on Thursday.
Further review of the report showed that operating income stood at N426.3 billion from N417.5 billion in 2019, while gross earnings dropped marginally by 1.9 per cent to N579.4 billion from N590.4 billion in the previous year.
The company’s total assets rose by 23.9 per cent to N7.7 trillion in contrast with N6.2 trillion achieved in the corresponding period of 2019.
Also, customers deposits grew to N4.89 trillion against N4.02 trillion posted in the previous period.
The company explained that the decline of 1.9 per cent in gross earnings was driven by a 10.9 per cent year-on-year decline in interest income to N384.8 billion against N431.9 billion achieved in 2019.
This is largely on the back of government securities which declined on the short and long end of the yield curve.
Commenting on the performance, the Group Managing Director, UK Eke, explained that the company was pleased to close the year in a healthy financial position in spite of the difficult operating environment.
“FBNHoldings is pleased to close the year in a healthy financial position despite the difficult operating environment that has been characterized by unprecedented events as a result of the pandemic and challenging economic environment.
“As part of our strategic planning cycle, which is in the second year, we exited the insurance underwriting business through the sale of our interest in FBNInsurance to our long-term partner, the Sanlam Group. This decision is consistent with our portfolio optimisation strategy, underscored by the renewed focus on deepening our foothold in the banking sector through increased investment in digitalisation, innovation, and expansion in financial services for the benefit of our existing and new customers. The proceeds from the sale have been injected in First Bank of Nigeria to strengthen the core business of the Group and drive further market growth.
“Five years ago, we outlined our strategy to diversify our income stream by boosting non-interest income through a transaction-led banking model. We believe this decision reduced the burden on our customers during the lockdown by providing seamless access to banking service, as well as, support the effort of the Government and other donor agencies to reach Nigerians with the COVID-19 support programs.
“During the year 2020, Profit before tax grew 11.2% y-o-y to ₦ 83.7 billion and our non-interest income recorded a growth of 26.7% y-o-y to ₦ 174.7 billion. These results were despite the challenging rate environment evidenced by the decline in fixed income rates and higher cash reserving requirements leading to a 10.9% y-o-y decline in interest income to ₦ 384.8 billion. However, we mitigated the impact on net interest income by containing interest expense through reducing the cost of deposit and driving low-cost deposits.
“We remain focused on driving operating expenses down and improving cost to income ratio. In 2020, operating expense was up marginally by 0.5% y-o-y growing significantly slower than inflation. Notwithstanding, our strategy is to continue to deploy the two-pronged approach of driving revenue through the transaction-led banking model, whilst implementing initiatives geared towards containing operating cost, to help reduce the cost to income ratio.
“ I am also delighted with the improved risk management processes and architecture which continues to yield positive results. Consistent with our commitment to a single-digit NPL to the market, we further reduced the ratio to 7.7% (Dec 2019: 9.9%).
“Overall, whilst these developments represent significant progress in our journey to reposition the Group, over the planning cycle, we will be increasing the pace of implementation of our mid-range initiatives including the optimisation of our portfolio to extract increased value from existing assets, and evaluating options to support our vision of remaining dominant in the financial services industry in Africa.”