FBNH Rallies On Momentum Investing, Despite Overpriced State, Low Dividend Payout


FBN Holdings Plc is one of the largest and most diversified financial services organizations across the African continent, with a very rich history of financial inter-mediation spanning well over a century. It is structured along commercial banking, Merchant banking, capital markets, trusteeship and insurance brokerage. The company has 10 subsidiaries contributing to its top and bottom lines.

While we await the presentation of its full-year audited results, a critical review of its unaudited scorecard of the holding company for the twelve months ended December 31, 2023, reveals a strong performance, besides being the best that have emanated from the one stop financial supermarket in recent years. Recall that the group had struggled with the cancer of huge non-performing loans and intense board room politics that had stalled its growth into an elephant worth its age and logo. It resilience, despite those drawback had fired the interest of majority shareholders as they continued to increase their stake in the company. The renewed interest, expectedly changed the shareholding structure while supported the movement in share price and momentum investing in the holding company.

The ensuing volatility has created wealth for smart traders who followed the momentum trading, just a Foreign Exchange gains, the high interest rates regime, among others boosted its profitability level to an all-time high which translated to N8.64 Earnings Per Share in twelve months as the banking subsidiary moved to further boost its Capital Adequacy Ratio of 16.53%, even though it is already above the 15% regulatory threshold. This, it intends to undertake with planned primary market activities that will see it raising fresh capital by way of a Rights’ Issue of up to N150 billion that would fortify its capital base and put it in a position to undertake bigger ticket businesses, while creating value for various stakeholders across the value chain.

In the realm of business, especially in the financial market, the journey of a financial institution often traverses peaks of success and valley of challenges. FBNH’s recent financial report unveils a narrative of a strong rebound, marked by notable achievements and impressive figures that underscore its growth trajectory. In the twelve-month period, the company reported gross earnings of N1.52 trillion, against the N805.13 billion reported in the same period of 2022, which represented a princely 88.5% leap that surpassed expectations. In the same vein, profit after tax soared to N310.01 billion, representing an even more robust 128% growth, compared to the 2022 figure of N136.17 billion.

Net interest income witnessed a commendable improvement, jumping by 46% to N530.03 billion from N363.25 billion in 2022, contributing to the enhancements seen in the profitability ratios and operational efficiency as depicted in the above tables.

Investors’ concern are sustainability of this growth trajectory and the dividend payout policy which has remained relatively low compared to other first tier banks.

The bank’s Loans-to-Deposits ratio for the period was slightly above the regulatory requirement and was boosted by 55% and 66% increase in Total Deposits and Total Loans & Advances for the period under review. The proposed capital raise could bode well for future expansion initiatives, just as the institution’s objectives for raising the new capital to support its business growth, achieve Basel III readiness, and ensuring increased resilience for enhanced shareholder value.

Looking at these factors, we expect that the audited 2023 full-year account and successful capital injection could further boost the capital adequacy ratio to 19.53%. Also. on the strength of the bank’s digital performance, we believe that FBNH is poised to maintain and even build upon the current momentum within its agency banking franchise.

The above valuation ratios reveal the undervalued state of FBNH, as our long-term outlook for the company remains positive, due to the expected impact of higher yields on overall performance, despite the prevailing challenges and economic headwinds encountered by FBNH, the management of the company remains buoyed by the hawkish instance of the apex bank. The earnings and dividend history of the bank reveal a low payout as the group’s annual bazaar of huge provisions for bad and doubtful loans. For example, the payout ratio in 2022 was 13.2%. For example, out of N3.79 EPS, a dividend of 50 kobo was paid. On this note, a projection of N1.15 dividend is expected from the audited account, which is low compared to the market value and that of its peers. This may not impact the share price positively when announced, but the buying interest of major shareholders may support price stability, following which income investors and traders should trade with caution.

FBNH Technical Analysis

Trend Analysis: The 50-Day Moving Average, as well as the 200-Day Moving Average are trending upwards and the stock price is well above both, a situation that typically suggests a strong bullish trend, just as the price action remains above the trend after forming a bullish channel.

Volume: There is no significant volume change that stands out around the recent price action, which may indicate that the upward trend is consistent without sudden interest spikes that might lead to high volatility.

Relative Strength Index (RSI): The RSI of FBNH is slightly above the middle at approximately 59.1, which suggests that the stock is neither at overbought, nor oversold, it provides no clear signal for immediate action.

Money Flow Index (MFI): Money entering the stock has been stable on a daily and weekly time frame, at 86.08 and 63.50 respectively.

MACD: Despite being a lagging indicator, it has remained bullish on a daily and week chart confirming uptrend and price momentum since February on daily time frame and October on a weekly reading.

Trading Strategy

  1. Confidence level: Moderate to High
  2. Position: Long-term (Given the overall bullish trend and moving average positions}, but for the short-term, take profit before the audited results hit the market. However, do not sell down.
  3. Entry Point: A pullback to the 50-Day Moving Average, or 20-EMA could be a reasonable entry point.
  4. Exit Point: Set an initial target near the recent high, which is around the N30 and N34 price level.


While the recent pullback in FBNH’s price may have caused some short –term volatility, the underlying strength of the company’s business and its commitment to customer value suggest a promising outlook, especially with the plan injection of fresh capital. Traders and investors alike should wait for a dip as a potential opportunity to buy into a fundamentally sound financial holding company with strong growth prospects and rich history.