FBNH Sets New Earnings Record, Grows Profit by 99%
Nigerian financial service giant, FBN Holdings Plc, beats analysts profit expectation for the financial year 2021, according to its latest audited report filled with the Nigerian Exchange (NGX).
According to the result, FBNH achieved a 99.1% jump in pre-tax profits to N166.7 billion, aided by the recovery of bad debt loans from its customers during the period.
Equity analysts told MarketForces Africa that a pre-tax profit of N166.7 billion achieved is a new earnings record for the group operation that must be maintained going forward.
Recall the management had embarked on a balance sheet cleaning programme that has set the group on the path of recovering its brand identity among competing brands and increased rivalry with peers.
A total sum of N141 billion was recovered, according to the audited statement which include bade debt of the Atlantic Energy which had been written off due to a low probability of recovery after the client defaulted.
A slew of analysts that spoke with MarketForces Africa attributes the recovery success to improved governance activities and low or rather well-managed insider loans.
FBNH net interest income was down 9.3% due to lower earnings yield in the financial year 2021. Earning yield slowed down to 7.3% from 9.3% in 2020.
However, the bank’s fee and commission income expanded, though the group Impairment charge on credit losses grew significantly.
The group’s net interest income declined in 2021 when compared with 2020 due to pressure on Interest Income because of lower yields, according to analysts.
Interest Income declined 4.1% in the financial year 2021, beating CSL Stockbrokers’ estimates by 6.3%, mainly on the back of a decline in yields on investment securities on fair value through other comprehensive income.
On the other hand, interest expense was up 5.7% amidst a higher headline inflation rate in Nigeria. However, the cost of funds went down to 2.1% in December 2021 compared with 2.3% in the corresponding period of 2020.
The group saw its net margin of interest-bearing assets slow down to 4.5% in December 2021 from 6.1% in December 2020
The group’s net fee and commission income expanded by 24.4% due to the increased volume of activities processed last year.
This outstanding growth performance in fees and commissions was driven by a 23% growth in credit-related fees and a 32% growth in Letters of credit fees and commissions.
It also recorded a 38.9% growth in funds transfer and intermediation fees, a 30.2% growth in account maintenance fees, a 14.2% growth in custodian fees, and a 28.8% growth in Brokerage and intermediations.
E-banking fees remained resilient, up 15.8% in the period, suggesting increased transaction volumes. Except for money transfer commission, all other fee Income lines showed growth, CSL Stockbrokers said in a note.
FBNH impairment charge rose 48.3% year on year to N91.7 billion in 2021 compared with N61.8 billion in 2020 despite the group balance sheet cleaning efforts.
CSL Stockbrokers said this brings 2021 Cost of Risk (COR) to 3.2% compared with 2.5% for 2020, significantly ahead of analysts’ estimate of 1.5%.
Pre-tax profit was up 99.1% year on year. Overall, FBNH Plc’s profit after tax for the period surged 68.4% to N151.1 billion.
In 2021, FirstBank Nigeria reported a capital adequacy ratio (CAR) of 17.4% compared with the current 15.0% minimum. The group’s management proposed a dividend of N0.35/s compared with N0.45/s proposed in 2020. #FBNH Sets New Earnings Record, Grows Profit by 99%