FBN Holdings Nets N326bn Profit Despite FX Loss, 231.4% Loan Impairment Growth

The board of FBN Holdings Plc, on Thursday presented its audited financials for the year ended December 31, 2023, a week shy of the projected month-end date. Highlights of the result showed that Profit After Tax grew by N174.171bn or 126.05%, faster than gross earnings’ 95.7% or N780.089bn. Profit growth could have been much more robust, but for the huge N332.787bn foreign exchange loss, compared to the previous year’s N32.43bn gain; as well as the N158.799bn or 231.42% leap in impairment charge on financial instruments during the period.

Another highlight of the result was that net profit rose to N310.37bn, compared to previous year’s N136.173bn, which represented Earnings Per Share of N8.59, up from N3.75 each. Of this, the directors have elected to stay very conservative as usual, recommended a dividend of 40 kobo per ordinary share of 50 kobo each, amounting to N14.358bn, down from N17.947bn or 50 kobo each distributed at the end of 2022.

According to the result, gross earnings rose to N1.595tr from N815.166bn in the corresponding period of 2022; with the commercial banking group contributing N1.493tr; while merchant bank and asset management group pooled N97.623bn. The bulk of the year’s earnings was N960.328bn interest income, representing an increase of N408.391bn or 73.99% over the previous year’s N551.937bn, driven primarily by the N627.116bn from customer loans and advances, up from N403.616. Interest expense growth was however more significant at N222.727bn or 118.03% from N188.688bn to N411.415bn, the lion’s share of which was the N268.925bn expense on customer deposits, an increase from N117.199bn; followed by N86.411bn from borrowings, which was almost double previous year’s N48.505bn. This left net interest income at N538.913bn, compared to the previous N363.249bn, representing an increase of N185.664bn or 51.11%.

Impairment charge on financial instruments stood at N227.418bn from N68.619bn; leaving a net interest income after impairment charge for losses of N321.495bn, up from N294.63bn in the same period of 2023.

Fee and commission income rose from N143.981bn to N226.454bn, with electronic banking fees fetching N66.343bn from N55.099bn; followed by fees from letters of credit and commissions worthy N60.622bn from N16.022bn; while expense rose from N26.012bn to N33.256bn, driven by the N14.759bn acceptance costs (alternative channels) which rose from N11.965bn to N14.759bn; ahead of the N11.023bn in SMS charges from N7.596bn. Net fee and commission income grew from N117.969bn to N193.198bn. Aside the foreign exchange loss, net gains on sale of investment securities improved to N34.848bn from N22.425bn; net gains from financial instruments at face value soared to N680.62bn from N38.648bn; dividend income improved from N3.166bn to N5.742bn; while other operating income fell to N19.23bn from N22.404bn.

Personnel expenses rose to N179.090bn from N117.376bn; depreciation of property and equipment rose to N29.48bn from N20.982bn; amortization of intangible assets increased from N7.068bn to N3.869bn. Operating expenses jumped to N358.055bn from N228.519bn, with maintenance accounting for the lion’s share of N70.833bn from N42.961bn; followed by N51.121bn paid as AMCON resolution cost from the previous N39764bn. Operating profit, therefore rose from N157.727bn to N358.055bn; leaving profit before tax at N358.875bn, up from N157.902bn. The minimum tax for the period rose from N3.362bn to N9.282bn.

On the balance sheet, total assets grew to N16.937tr from N10.577tr, lifted mostly by the loan book growth from N3.789tr to N6.359tr; while total liabilities improved from N9.581tr to N15.19tr, with customer deposits amounting to N10.663tr, from N7.124tr.