FBN Holdings Plc, on Thursday presented its audited financials for the half year ended June 30, 2017, with gross earnings rising 7.8% from previous half year to N288.8bn, with interest income jumping to N232.378bn from N169.201bn. Interest expense of N68.293bn, up from N43.151bn, left net interest income at N164.085bn, as against the prior half-year’s N126.05bn.
A segment-by-segment breakdown of the earnings for the period revealed that the group’s commercial banking business, expectedly, remains its money spinner, accounting for N260.905bn.
Impairment charge for credit losses in the group’s commercial banking business however dropped slightly to N62.408bn, from N69.914bn, following which net interest income after impairment charge for credit losses stood at N101.677bn, almost double the N56.136bn recorded in the first half of 2016.
The group earned N7.197bn from insurance premium, which significantly better than the previous N4.047bn, of which after ceding some to reinsurers, resulted in net insurance premium revenue of N5.509bn, as against N3.511bn previously.
Fee and commission income rose slightly from N34.709bn to N36.762bn, while expense grew from N4.654bn to N5.906bn, just as net gains on foreign exchange suffered a N5.008bn decline from N52.914bn between January and June of 2016.
Personnel expenses was flat at N42bn, compared to N42.767bn, while other operating expenses rose from N53.135bn to N65.347bn, as a result of which operating profit fell by N10.452bn or 22.77% to N35.434bn from N45.886bn.
Profit before tax stood at N35.628bn or 79 kobo earnings per share; down from N45.886bn or 98 kobo per share,while net profit came to N29.486bn from N35.855bn, a drop that would have been more, but for the decline in income tax expenses to N6.142bn from N10.031bn. The commercial banking business also yield the bulk N27.888bn PBT and net profit of 23.124bn
The group’s balance sheet showed that total assets rose slightly to N4.881tr from N4.736tr at the end of last financial year 2016, out of which customer loans and advances dropped to N1.998tr from N2.083tr; just as total liabilities closed for the period at N4.271tr from N4.154tr, helped by customer deposits of N2.996tr, a decline from N3.104tr. Shareholders’ funds for the period however improved to N609.924bn from N582.575bn.
A further breakdown of the result shows the need for FBN Holdings to grow contribution of its offshore subsidiaries to top and bottom-line, therefore reducing its exposure to the Nigerian business environment. The figures shows that N274.656bn of revenue came from Nigeria, up from N243.344bn; and only N14.157bn from outside the country, same as non-current asset from the domestic operating environment, which stood at N76.881bn, down from N79.425bn.
A statement by the group quoted Urum Kalu Eke, its Managing Director as saying on Thursday: “In line with our strategic focus on improving asset quality; cost optimisation; and, enhancing revenue generation, we are beginning to see improvement across a number of metrics associated with these initiatives.
“Our focus on enhancing the quality of our loan book is reflected in a decline in non-performing loans, a reduction in our impairment charge following improvement in the asset quality outlook, and we will continue to prioritise this area through the rest of this year. Similarly, consistent improvement in the efficiency ratio is testament to the efficacy of our cost optimisation initiatives, though these results have been partly offset by the currency devaluation and high inflationary environment.”
The Group CEO noted the strong “growth trajectory in our Merchant Banking & Asset Management and the Insurance Group. These businesses complement our Commercial Banking franchise and represent new frontiers for our Group, firmly supporting our aspiration of becoming a leading financial services institution in Middle Africa. We remain committed to maximising returns to our shareholders as well as creating sustainable value.”
Also commenting on the score-card, Managing Director and Chief Executive of First Bank, the group commercial banking arm, Dr. Adesola Adeduntan, as noting the intensified credit resolution efforts, which resulted “in the improvement of the asset quality position with the reduction in NPLs (Non-Performing Loans) from 25.7% in the last quarter to 21.8% at the Commercial Banking group. We are optimistic about further improvement in asset quality and the general quality of the loan book,” he stressed.
The bank’s focus in the second half of 2017, he continued, is to drive “enhanced revenue generation, efficiencies and profitability towards an overall improved performance, while remaining focused on sustaining the portfolio management effort.”
