FBNH Halts Rally, Valuation Falls Below N600bn
The share price of FBN Holdings (FBNH) has plunged after the previous successive rally in the local bourse. Momentum dried up due to an unhealthy battle for the single largest shareholding position by investors.
At the close of the trading session on Friday, the financial services group was valued below N600 billion, the level it passed when Oba Otudeko made a move to return as chairman having accumulated the largest chunk of the group shares outstanding.
In its recent report, GCR Ratings affirmed First Bank of Nigeria Limited’s national scale long and short-term issuer ratings of A+ (NG) and A1 (NG) respectively, with the Outlook revised to Positive from Stable
The rating agency said the national scale ratings of First Bank of Nigeria Limited reflect the strengths and weaknesses of FBN Holdings Plc, one of the largest financial services groups in Nigeria.
FirstBank is the core operating entity within the Group, accounting for about 95.3% of total assets and 94.1% of operating revenue in the financial year ended 31 December 2022, it said.
The positive outlook, according to the rating note, reflects GCR’s expectations of a sustained improvement in the Bank’s capitalisation assessment in addition to a potential Tier 1 capital raise of N150 billion over the next 12-18 months.
The ratings affirmation balances FirstBank’s strong franchise, improved capitalisation metrics, and a sound funding and liquidity assessment against a significant exposure to foreign currency risks in the loan portfolio, a high percentage of stage 2 loans to gross loans and a rising credit loss ratio in the period under review.
“FirstBank’s competitive position is a positive ratings factor, underpinned by a strong banking franchise across nine international markets”, the rating note said. In Nigeria, FirstBank accounted for about 10%, 13% and 14% of the banking sector’s total assets, gross loans and customer deposits respectively as of 31 December 2022.
FirstBank services its over 42 million customers (including wallets) through 739 physical branches across the country, over 17,000 P.O.S machines and 12.1 million ATM cards.
GCR said FBNH’s profitability is healthy, with a low funding cost that supports net interest income, which accounted for 61.5% of operating revenues and strong non-interest income (38.5% of operating revenues) in 2022.
However, the financial institution cost cost-to-income ratio at 61.6% in 2022 remains higher than other Tier 1 peers, according to the rating note. Naira Devaluation Deepens Economic Crisis in Nigeria
