FBN Holdings Net Profit Falls By 22%, As Q1 Loan Provision Climbs 121.74% Up

The board of FBN Holdings Plc, on Thursday released its corporate score-card for the year ended December 31, 2016 and first quarter to March 31, 2017. While the Q1 filing was within the regulatory timeframe, the former came one day earlier than the promised April 28, 2017 permission sought by the directors to delay its submission.
Highlight of the first quarter result was that while gross earnings rose 32.23%, net profit came 22.08% weaker than the figures in the corresponding period of 2016.
Earnings rose to N141.045bn, up by N31.557bn or 28.82% from previous first quarter’s N109.488bn, helped by the increase in interest income from N82.457bn to N114.125bn; with the bulk N128.717bn generated by the commercial banking business segment; while interest expense was up by N14.241bn or 72.71% from N19.584bn to N33.825bn; following which net interest income stood at N80.3bn, up from the previous N63.873bn.
The growth in interest income was heavily impacted as provisions for non-performing loans soared N15.527bn or 121.74% to N28.821bn from N12.754bn in the corresponding period of last year. This resulted in net interest income after impairment charge for credit losses of N51.479bn, almost same level as the previous N51.119bn.
Net insurance premium revenue could not make up for the huge provision, as it only limped to N1.687bn, compared to the previous N1.551bn.
Growth in fee and commission income could also not make up either, rising to N18.038bn from N16.489bn; fee and commission expense rose from N2.144bn to N2.76bn. Net gains on foreign exchange climbed to N2.819bn from N1.398bn; just as net gains on investment securities also fell to N462m, down by 86.66% from N3.465bn. Net gains from financial instruments at face value rose to N1.705bn from the previous N722m; dividend income jumped from N33m to N1.502bn, representing an increase of about 4,451.51%; other operating income improved to N710m from N373m; just as insurance claims increased to 739m from N369m.
Personnel expenses was flat at N21.069bn, as against the previous N21.435bn; depreciation, armortisation and impairment rose slightly to N3.756bn from N3.586bn; while operating expense increased from N25.565bn to N30.115bn, resulting in operating profit of N19.963bn, compared to the previous first quarter’s N22.051bn.
Profit before tax stood at N19.963bn as against the previous N22.051bn; income tax expense also jumped to N3.812bn from N1.327bn; following which net profit fell by N4.576bn from N20.724bn to N16.147bn; lifted by the N13.433bn from the commercial banking group.
Meanwhile, the commercial banking group accounted for N28.647bn of the impairment charge on credit losses. The net profit translated to Earnings Per Share of 44 kobo; down from 57 kobo in previous year; while net profit margin (how much of each Naira earned was translated to profit within the period) fell to 11.44%, from 18.92%.

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