High returns herald new era at FBNH

• Gross earnings. N583.5bn •Total Asset. N5.568 Trn • PBT. N65.288

UK Eke, Group Managing Director, FBN Holdings

By JULIUS ALAGBE

First Bank of Nigeria Holdings, FBNH, seem to be bringing back the old days again for its shareholders. The group which recently celebrated its 125th years as a corporate entity capped the anniversary with an unexpected good news for shareholders by declaring a N59.7 billion profit after tax, PAT and the highest dividend in five years.

Its audited result made available to the Nigerian Stock Exchange, NSE, showed FBNH has built up a market capitalization of N279.983 billion as its shares traded at N7.50. The performance which analysts have commended came on strong business outlook as the Holding company   grew year on year profit take by 58.23 percent from its continuing operations. The Holdco plans to pay 26 kobo per share in 2018 as against 25 kobo in 2017.

At the headline, FBNH recorded N583.477 billion as its gross earnings in the financial year 2018 result compare with N595.45 billion the group made in 2017. Interest income came a bit lower just as expenses incurred in funding expanded, thus resulting in 14.28 percent decline in the Holdings net interest income position.

Although turnover dropped marginal income went up because its impairment as well as operating costs went down pointing to the fact that the bank is more professionally managed.

More than 42 percent decline in impairment charge for credit losses was recorded. In 2018 FBNH booked N86.911 billion against its income statement compared with more than N150 billion in 2017. FBNH’s net insurance premium revenue also rose by about 52 percent from N10.234 billion in 2017 to N15.541 billion in 2018. Similarly, fees and commission incomes expanded by about 25 percent.

In 2018, the group recorded fee and commission income that closed the year at N92.72 billion as against N74.45 billion achieved in 2017.  The audited result however shows an increase in personnel expenses from N85.678 billion to N93.395 billion it had reported in 2017. This translates to more than nine percent uptick year on year but below average rate of inflation for the period.

Overall, operating expenses at the holdings level expanded 9.78 percent from N134.799 billion to N147.976 billion.  It closed financial year 2018 with total investment in assets at N5.568 trillion as against N5.236 trillion in 2017. This represents more than six percent increase in assets but liabilities of the group also expanded by 10.52 percent in the year.

As against N4.558 trillion in 2017, FBNH total liabilities settled at N5.037 trillion and its shareholders funds were reduced by about 22 percent. Total shareholders fund berthed at N530 billion compare to N678 billion it carried forward into the year.  FBNH earnings per share closed the year at N1.66 as against N1.05 kobo in 2017 with an increase of 102.23 percent in return on equity from 5.56 percent to 11.24 percent.

A former banker who was part of the turnaround management put together by the former Central Bank Governor, Sanusi Lamido Sanusi, who was then FBN’s CEO, told Business Hallmark that what is happening is the result of the effort they make under Sanusi to reposition the bank, which they present leadership is working hard to accomplish.

“The bank is just recovering from a major downturn. The new management team seems to be achieving progress with turnaround. We started it under Sanusi, but there was a break somewhere but I’m impressed with they are doing now after the challenges of the past few years”.

FBN Holdings Plc provides commercial banking activities. The Company offers merchant, investment banking, trusteeship, fund management, registrars, and advisory services through its subsidiaries. FBN also sells insurance policies and mortgages via subsidiary companies.

With 35.9 billion shares outstanding, FBNH Plc opened at N7.80 on Friday. The stock has a market cap of N269.215billion, a PE ratio of 4.6.