FBN Holdings Bolsters Performance as Profit Spikes 56.3% to ₦49.5bn
FirstBank Holdings Plc, a diversified financial service group has reflated its earnings performance, and raise bottom line significantly in the first half of 2020.
The Holdings in its recently release unaudited financial statement submitted to the Nigerian Stock Exchange raised earnings performance significantly as profit after tax surged 56.3% to settle at ₦49.5 billion.
Key extracts of the report showed that gross earnings expanded by 5.80% to ₦296.4 billion in the first half of 2020 from ₦280.3 billion in the comparable period in 2019.
FBNH’s net interest income decline by 7.4% from ₦141.7 billion to ₦131.3 billion, but this was more than compensated for in service related income.
Specifically, FBNH reported a 46.8% growth in non-interest income for the period under review, coming from ₦54.6 billion in first half of 2019 to ₦80.1 billion.
This was supported by its Firstmonie agent banking network which has grown to over 59,000, further reaffirming FirstBank’s undisputed leadership, strong retail franchise and wide coverage.
Elsewhere, net interest income rose 17.9% on quarter on quarter, aided by 29.5% drop in interest expenses.
“We attribute the moderation in interest expense to the 100 bps cut in MPR on the bank’s huge savings deposit base and the impact of moderating yields”, analysts at Cardinalstone said.
On year on year, FBNH operating expenses increased marginally at 0.9% to ₦139.2 billion compare to ₦137.9 billion in the comparable.
The increase in operating expenses is however attributed to rising inflationary trend in the past 11-months.
Lender’s gross loans to customers contracted by 2.6% while customer deposits improved by 1.9% relative to first quarter of 2020.
On asset quality, on the back of successful balance sheet repair program, the financial services bouquet further reduced non-performance loan to 8.8% in the first half of 2020.
This translates to 110 basis point reduction from 9.9% reported at the end of financial year 2019.
Year to date, FBNH has expanded the size of its balance sheet by about 15% from ₦6.2 trillion in December 2019 to ₦7.1 trillion in the first half of 2020.
Meanwhile, total deposits ballooned to ₦4.4 trillion from ₦4 trillion on accounts of strong brand affinity and customers’ loyalty.
Ahead of retain earnings capitalisation, FBNHoldings said it injected additional Tier 1 capital into FirstBank boosting Capital Adequacy Ratio to 16.5%.
Commenting on the results, UK Eke, the Group Managing Director (GMD) of FBNHoldings said: “The H1 2020 financial results are impressive and reconfirm our consistent focus on enhanced shareholder value”.
FBNH boss said, “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”, Eke explained.
During the quarter, Eke said FBNH successfully divested from the underwriting (insurance) businesses to focus on 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”, he added.
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”, Eke stated.
FBN Limited:
At commercial banking level, FirstBank of Nigeria limited shows an outstanding performance following a 6.1% increase in gross earnings to N278.7 billion from N262.8 billion.
This was strongly supported by income from interest earnings and non-interest earnings assets in the period.
FirstBank’s net interest income jerked up 8.2% year on year to N126.1 billion from N137.4 billion in the comparable period.
Its non-interest income rose 48.7% year on year to N72.8 billion from N49 billion in the comparable period in 2019.
Commercial banking arm operating expenses increased marginally by 0.7% to N132.1 billion from N131.1 billion, reflecting increase in average inflation rate in the period.
FBN Limited recorded a 16.5% expansion in total asset from N5.9 trillion at the beginning of the year to N6.8 trillion.
Despite the outbreak of coronavirus, FBN loan and advances increased by 7.2% to N2 trillion from N1.9 trillion at the beginning of the year.
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Also 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 year on year growth in gross earnings and profit before tax by 6.1% and 9.2% respectively.
This came 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)”, Adeduntan explained.
Furthermore, he said 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”, FBN Chief Executive said.
FBN Holdings Bolsters Performance as Profit Spikes 56.3% to ₦49.5bn
