FBN Holdings Nets N73.665bn, Offers N0.38 Dividend, As Impairment Charge Drops By 41.5%

The board of FBN Holdings Plc, on Monday, gave shareholders reasons to cheer, as it released the audited financials for the year ended December 31, 2019, highlights of which included the 26.59% growth in net profit, despite the 76.46% rise in income tax expense during the period under review.
The numbers were, however, significantly enhanced by the 199.44% improvement in net gains on sales of investment securities, the 41.54% plunge in impairment charges, and the 71.02% fall in net gains on foreign exchange. There were also net gains from financial instruments at FVTPL of N28.937bn, as against losses of N3.135bn in the previous year.
These made up for 21.2% growth in operating expenses, as well as the marginal increases in gross earnings and interest income. The directors have therefore recommended a dividend per share of 38 kobo, from Earnings Per Share of N1.95, up from the previous N1.61 each, for consideration at the annual general meeting slated for April 17, 2020, in Lagos.
The board also noted that the 2018 financials were restated, hence the changes from that reported earlier.
Specifically, gross earnings stood at N627.008bn, compared to N587.406bn; of which the commercial banking group contributed N553.291bn, followed by the insurance group, N36.942bn; and N35.443bn from the merchant banking and asset management group. By geography, revenue for the year mostly came from within Nigeria at N542.919bn, up from N499.152bn; while that from outside Nigeria dropped from N88.254bn to N84.089bn.
Interest income rose from N435.563bn to N442.556bn; while interest expense climbed to N152.342bn, from N150.242bn, following which net interest income inched from N285.321bn, from N290.214bn.
The impairment charge for credit losses for the period dropped by N36.332bn to N51.33bn, compared to the N87.465bn reported in the corresponding period of 2018; with net recoveries on loans previously written off dropping from N9.137bn to N7.493bn. Loan write-offs for the period stood at N1.851bn just as increase in impairment stood at N1.736bn from N2.245bn. Net interest income after impairment charge for credit losses rose to N239.081bn, 20.84% better than the previous year’s N197.856bn.
Net premium revenue from the group’s insurance subsidiary declined by 20.81% to N12.307bn from N15.541bn; fee and commission income increased by 12.52% from N104.33bn, driven largely by electronic banking fees of N48.033bn, up from N34.029bn; followed by the N13.268bn from account maintenance, up from N12.329bn. Funds transfer and international fees rose from N6.974bn to N7.799bn; while custodian fees dropped to N5.98bn from N6.41bn. Fee and commission expenses grew from N17.33bn to N20.483bn.
Net gain on foreign exchange fell from N32.918bn in 2018 to N9.54bn; net gains on sales of investment securities climbed from N5.733bn to N17.167bn. Dividend income for the year stood at N4.37bn, 89.01% improvement over the N2, 89.01% improvement over the N2.312bn of the prior year.
Other operating income fell by 9.65% from N3.233bn to N2.921bn, largely comprising income from private banking services and Value Added Tax recovered; insurance claims soared by 114.25% from N4.717bn to N10.106bn; as personnel expenses stood at N99.38bn, up from N93.395bn.
Depreciation of property, plant, and equipment rose by 37.01% to N16.828bn, compared to N12.282bn; amortization of intangible assets was up by 16.14% to N16.197bn from N5.336bn.
Operating expenses jumped by 21.2% from N150.292bn to N182.151bn, the lion’s share of which was the N38.532bn regulatory cost, up from N35.103bn; the N28.155bn maintenance expenses, up from N23.134bn; and the N20.378bn operational and other losses, up from the previous N6.91bn. Consequently, operating profit improved by 30.83% from N63.3bn in 2018, to N83.508bn.
Profit before tax was up 30.92% at N83.595bn, as against the previous N63.853bn.
Income tax expense rose by 76.46% to N9.783bn from N5.544bn; resulting in net profit of N73.812bn, up from N58.309bn. A breakdown of the profit showed that the commercial banking group raked in N63.1bn; insurance, N7.624bn; and merchant banking, N6.406bn.
Total assets rose to N6.203tr, up from N5.568tr, helped by the N1.852tr customer loans and advances, from N1.67tr; cash and balances with central banks jumped from N653.335bn to N1.025tr; while investment securities dropped from N1.663tr to N1.414tr.
Total liabilities increased from N5.039tr to N5.542tr, of which customer deposits stood at N4.019tr from N3.486tr. Total equity rose from N528.943bn to N661.125bn.