FBN Holdings Spikes as Investors Price in Impressive Earnings

FBN Holdings Spikes as Investors Price in Impressive Earnings

FBN Holdings Plc climbed by more than 10% in the equities segment of the Nigerian Exchange, NGX, over a fresh rally that lasted for 4 out of five trading sessions last week. According to trading data from the NGX platform, Ticker: FBNH surged to N33 following an unusual volume of shares traded on the equities platform, reflecting its strong liquidity.

The financial services company’s market value inched to N1.18 trillion on Friday, gaining N109.5 billion week on week due to increased demand. Over the last 3 years, on average, earnings per share has increased by 57% per year, but the company’s share price has only increased by 39% per year, which means it is significantly lagging earnings growth.

FBN Holdings recorded a 137.4% year-on-year increase in earnings per share to N20.40 from N8.59, a review of its unaudited financial statement showed. In 2024, FBNH reported a 158.4% year-on-year increase in interest income, which settled at N2.42 trillion, surpassing the N2.00 trillion mark for the first time.

The surge in interest income was primarily driven by higher yields in the fixed income market and a 69.4% year-to-date expansion in earning assets to N18.99 trillion, Cordros Securities Limited said in a note. In nominal terms, the group saw significant growth across key income lines, including loans and advances to customers, investment securities, and advances to banks.

Specifically, loans and advances to customers surged by 123.7% to N1.36 trillion, investment securities grew by 205% to N849.66 billion, and advances to banks increased by 327.1% year on year to N206.42 billion in 2024. Interest expenses also surged by 163.5% to N1.03 trillion, driven by higher costs on deposits from customers and financial institutions despite an improved funding mix.

A high interest rate environment has wider impacts on earnings, income, and expenses, and analysts expect this to persist in 2025. Interest on deposit payments increased by 132.2% to N591.86 billion in 2024, while payment on deposits by financial institutions rose by 427.4% to settle at N275.84 billion in 2024.

Current and Savings Accounts mix settled at 81.6% in 2024, up from 81.2% in the comparable year in 2023, according to analysts note.

Similarly, FBN Holdings borrowing costs rose by 86.3% year on year to N160.98 billion, while asset exposure triggered credit impairment charges of N410.81 billion.

Analysts reported that the group’s non-interest income grew by 43.2% year on year to N847.28 billion, driven primarily by higher net fees & commission income and FX revaluation gains.

Further details revealed that net fee and commission rose by 27.9% in 2024 to N239.18 billion and FX gain climbed by about 110% year on year to N33.83 billion. These gains were sufficient to offset losses from foreign exchange trading totaling N96.43 billion and investment securities losses of N40.29 billion in the year.

Further down, operating expenses increased by 73.4% year on year to N965.82 billion, primarily driven by an increase in personnel expenses, AMCON levy, depreciation and amortisation, and NDIC premium.

Still, the group’s operating income grew faster than operating expenses, hence the cost-to-income ratio settled lower at 52.8% from 61.0%. Profitability was stronger in 2024. FBNH profit after tax was 137.3% year on year higher at N736.73 billion, after accounting for the tax expenses of N125.66 billion. #FBN Holdings Spikes as Investors Price in Impressive Earnings Zenith Bank Hits 52-Week High in Fresh Rally Ahead of Earnings