FBNH Slumps as Femi Otedola Sells Direct Shareholding
FBN Holdings Plc has inched to about N512 billion in market valuation as the group released its audited financial statement for 2022 and first quarter 2023 earnings results concurrently. A review of the group’s audited report revealed a significant decline in its single largest shareholder, Femi Otedola, direct interest.
The financial services group has seen its shares running ahead equities index despite seesaw movements in the local bourse, FBNH has been gathering momentum in the past months, suggesting a large order book has been filled due to a level of surge in its valuation.
Data from the stock market show the stock slumped after FBNH’s board of directors announce the proposed dividend payment of 50 per share to shareholders, a more than 40% increase compare with 35 kobo that was declared in the comparable year in 2021.
MarketForces Africa reported that positive sentiment on FBNH has triggered an upward market valuation beyond earnings performance. The group has more than 87% of its outstanding shares available for trade in the stock market.
Surprisingly, its largest single shareholder, Femi Otedola, offloaded more shares in the first quarter of 2023 as FBNH’s unaudited report showed total shareholding dropped. Detail from the first quarter result reviewed by MarketForces Africa revealed that Otedola exited his position, and shareholding declined to 5.57% as of March 31, 2023.
It appears that there was a deliberate decision by the billionaire investors to reduce his direct holding to 10 million units from 210 million shares. Otedola also sell down indirect holdings, and another influential shareholder, Tunde Hassan-Odukale increased indirect shareholdings in the group.
Broadstreet analysts in the market talk alleged that the recent rally that spurred the financial services company’s valuation above N500 billion could be traced to buying interest among the influential shareholders.
Based on the group earnings performance, there was no surprise development, which suggests that the recent rally could be again, a fight to retain or assume control in the board room.
FBNH Plc raised its earnings bar as it doubled down on earnings performance amidst debt recovery. The group’s 3-year balance sheet repairing efforts pushed its profitability to an all-time high in the year.
In 2021, the group achieved a 99.1% jump in pre-tax profits to N166.7 billion, aided by the recovery of bad debt loans from its customers. However, market analysts told MarketForces Africa that the sustainability of the group’s improved performance will be tested in the financial year 2022.
Its latest audited result, FBNH recorded a more than 10% decline in earnings per share (EPS) amidst headwinds. The group’s annual profit declined by 9.8% year on year. Though, revenue performance saw impressive growth. Its exposure to Ghana government securities costs the group N5 billion due to participation in the country’s debt exchange programme.
FBNH achieved impressive numbers in the first quarter of 2023, despite the unfavourable business environment. Cordros Capital analysts said they believe the group will sustain the growth momentum across its core and non-core income lines supported by expectations of a higher interest rate environment and higher income from fees and commission, respectively.
The group Q1-2023 unaudited financial report shows a double-digit expansion across its core and non-core income lines. Earnings per share grew markedly by +55.1% to N1.38.
Supported by monetary policy tightening, the group recorded a 64.1% year-on-year growth in interest income to N179.61 billion, driven by gains recorded across the loans and advances to customers and investment securities contributory lines.
However, changing money market dynamics impacted the cost of funds across sources. In Q1, the group interest expense grew by 84.9% to N67.76 billion.
The spike was attributed to higher costs incurred on deposits from customers and financial institutions. Analysts at Cordros Capital attribute the higher cost of deposits from customers to the increase in the bank’s deposits (up 4.2% year to date to N3.95 trillion) amid a slight deterioration in its CASA mix.
In the first quarter, the CASA mix declined to 82.7% from 84.8% in the financial year 2022. Consequently, the group recorded an expansion in net interest income. FBNH’s non-interest income advanced by 11.8% year on year to N72.33 billion, buoyed by higher gains from investment securities and net fees and commission income in the period.
Then, operating income rose by 29.9% to N167.28 billion.
At the same time, the group saw a spike in operating expenses, up by 20.6% year on year, triggered by increases in the group’s regulatory and personnel costs. The HoldCo’s profit before tax grew by 53.3% to N56.11 billion in the first quarter of 2023. #FBNH Slumps as Femi Otedola Sells Direct Shareholding