Rating: Buy
Current Market Price: N7.15

Loan to Deposit Ratio: 52.77%
Year High: N7.85
Year Low: N6.25
Fair Value: N8.93
Equity Analyst: Tunde Segun Jeariogbe

Key Investment Ratios

• This report observed the first-quarter financial performance indices of First Bank Holdings Plc as recently released by the management, we compared the same with similar numbers released in the corresponding quarter of last year to establish growth, make projections and make recommendations accordingly.
• Although it reported a Profit at the end of the quarter, the Total Comprehensive Income was hampered by unrealized net losses that arose during the period and Exchange differences on the translation of foreign operations. Consequently, it reported a negative Total Comprehensive Income for the period.
• See below for other financial comparisons.

Company figures

• Gross Earnings through the three months is valued at N136.57 billion, same as 16.27% below the N163.12 billion reported in the 2020 first quarter business session.
• Interest Income dipped by marginal 25.31% to N78.35 billion, as against N104.90 billion in the corresponding quarter.
• Interest Expenses is currently valued at N25.56 billion below the N104.90 billion posted at the end of 2020first quarter.
• Operating Expenses is estimated at N66.82 billion, slightly lower than N68.87 billion used through the first three months of 2021.
• Profit before Tax is estimated at N18.90 billion versus N28.68 billion in the comparable quarter of 2020.
• After taking care of the Tax Expense, the management of FBNH posted N15.60 billion as profit for the quarter, which is 32.58% lower than the N23.14 billion earned in the 2020 first quarter.
• As noted above, Total Comprehensive Income is negative N15.93 billion, as against the Positive Income of N19.22 in 2020 first quarter.

• At the end of 2021 first quarter business session, the group’s Total Assets is valued at N7.83 trillion, same as 11.57% above the N7.02 trillion stated in its 2020 first quarter.
• Total Liabilities equally stood above comparable year by 11.48% at N7.07 trillion, versus N6.34 trillion in the corresponding period.
• Net Assets is valued at N764.83 billion, as against N680.34 billion posted at the end of the corresponding quarter.
• Total Deposit received during the period was estimated at N6.101 trillion, 11.40% above the N5.47 trillion in 2020 first quarter.
• Total Loans and Advances stated at the end of 2021 first quarter grew to N3.21 trillion, 9.61% higher than the N2.93 trillion reported in 2020.
• See the above table for details.

Financial Strength/Solvency Ratios

• Debt Ratio which compared Total Assets to Total Liabilities stood at 0.90x or 90.24%, implying that the Total Liabilities is approximately 90.24% of Total Assets. Please understand that Total Liabilities is inclusive of Total Deposits for the quarter.
• Total Debt to Equity for the period stood at 9.25x, same as 0.84% below the 9.69x estimated in 2020 first quarter. This implies that the company used 9.25 times of its equity through the period (note that financial institutions used more debt, since collection of deposits is their major business)
• Equity Ratio which compared Equity to Total Assets stood at 9.76% as against 9.69%, implying that the reported Equity value at the end of the period is 0.76% of FBNH’s Total Assets, this is a 0.76%growth over the previous year’s estimate
• Estimated Beta value for FBNH as at the time this report was compiled stood at 1.60, which is above market beta and industry average as at the time this report was compiled.

Profitability Ratios

• Pre-Tax Margin dipped by 26.79% to 13.84%, compared to the 17.58% estimated at the end of 2020 first quarter.
• Interest Expenses to Gross Earnings dropped by marginal 31.62% to 18.72%, as against the previously estimated 23.37%.
• Return on Average Equity through the year was estimated at 2.04%, as against 3.40% in 2020.
• See below table for detailed profitability ratios and comparison.

Efficiency Ratios

• Operating Expenses through the period stood above the corresponding year by 15.87% having moved from 48.93% to 42.23%
• Gross Earnings is same as 1.74% of the Total Assets valuation at the end of the period, this is 24.96% below the 2.32% estimated in 2020 first quarter
• It was equally established that 52.77% of the total deposits for the period was given out a loan, this is 1.61% below the 53.64% of deposit given out as loan and advances through 2020 first quarter.

Investment/Valuation Ratios

• At the end of the period, N0.43 was earned on each unit of FBNH shares. This is lower than the N0.64 earned per share at the end of the first quarter last year.
• Our adjusted PE-Ratio for the first quarter is valued at 2.70x as against 1.82x in the corresponding quarter.
• The said earnings per share is a 9.25% yield over the price of FBNH on the floor of the exchange when the result was released, this is a lower yield when compared to the 13.72% yield of 2020.
• The estimated Book Value per shares of FBNH is currently N21.31, the same as 12.42% above the N18.95 of 2020 first quarter.
• Thus, Price to Book Value stood at 0.22x as against 0.25x. This simply implies that, academically, the stock is currently selling below its book value on the floor of the exchange.

Valuation

While placing a fair value on each unit of FBN-Holdings shares, we considered the average of two valuation models. FCFE Stable GrowthModel valued the stock at N11.02 while H-Model placed the price at N5.42. We, therefore, arrived at an average value of N8.93 for each unit of its listed shares, thus, we Rated FBNH shares a BUY.

Five Years Financial History