FBN Holdings Plc has posted its scorecard for nine months 2019, as it announced a profit before tax that increased from N51.3 billion in September 2018 to N60 billion, up 16.9%  year on year (y-o-y).

Highlight of the scorecard  

• Gross earnings of N439.9 billion, flat year-on-year (y-o-y) (Sep 2018: N441.5 billion)
• Net-interest income of N211.4 billion, down 4.6% y-o-y (Sep 2018: N221.5 billion)
• Non-interest income of N98.8 billion, up 6.0% y-o-y (Sep 2018: N93.2 billion)
• Operating income of N310.2 billion, down 1.4% y-o-y (Sep 2018: N314.7 billion)
• Impairment charge for credit losses of N28.5 billion, improved by 62.6% y-o-y (Sep 2018: N76.2 billion)
• Operating expenses of N221.7 billion, up 18.4% y-o-y (Sep 2018: N187.2 billion)
• Profit before tax of N60.0 billion, up 16.9% y-o-y (Sep 2018: N51.3 billion)
• Total assets of N5.7 trillion, up 3.0% year-to-date (y-t-d) (Dec 2018: N5.6 trillion)
• Customer deposits of N3.7 trillion, up 5.3% y-t-d (Dec 2018: N3.5 trillion)
• Customer loans and advances (net) of N1.8 trillion, up 8.1% y-t-d (Dec 2018: N1.7 trillion)

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What it means

The scorecard reflects the growth trajectory over the first nine months of the year, with significant strides made in transforming the Group’s asset quality and diversifying the financial institution’s revenue streams across board.

In the third quarter, UK Eke, the Group Managing Director, FBNH, explained that the bank’s NPL dropped by 12.6% as the bank approached the end of the curve in the resolution of its legacy portfolio and confident of further reducing this to under 10% by the end of the current financial year.

He said, “We have continued to focus on enhancing our risk framework processes enabling an improvement in the quality of our loan book. Concurrently, we have also continued our drive towards ensuing long-term operational efficiency, resulting in a one-off cost increase pushing our CIR for the first nine months.  

“In terms of our revenue generation, we have delivered further increases in our non-interest income, on the back of growth in electronic banking fees as well as improvements in transaction-led income. 

“Overall, we are pleased with the progress we are making on numerous fronts and remain committed to not only enhancing shareholder value but also adhering to the long-standing principles of this great financial institution.”

Key contributors 

• Firstmonie Agent Banking network grown to over 35,500 with increasing agent capabilities and customer acquisition
• Over N2 trillion transactions processed on the Firstmonie agent network, further deepening the retail franchise, banking penetration and financial inclusion
• FBNQuest Trustees Limited, now a direct subsidiary of FBN Holdings Plc, effective August 30, 2019

Commercial Banking  

• Gross earnings of N390.6 billion, down 2.0% y-o-y (Sep 2018: N398.7 billion)
• Net interest income of N196.7 billion, down 5.6% y-o-y (Sep 2018: N208.5 billion)
• Non-interest income of N75.9 billion, up 0.6% y-o-y (Sep 2018: N75.5 billion)
• Operating expenses of N194.4 billion, up 17.4% y-o-y (Sep 2018: N165.6 billion)
• Profit before tax of N50.1 billion, up 18.6% y-o-y (Sep 2018: N42.3 billion)
• Profit after tax of N44.4 billion, up 14.7% y-o-y (Sep 2018: N38.8 billion)
• Total assets of N5.42 trillion, up 2.1% y-t-d (Dec 2018: N5.30 trillion)
• Customers’ loans and advances (net) of N1.85 trillion, up 8.0% y-t-d (Dec 2018: N1.71 trillion)
• Customers’ deposits of N3.6 trillion, up 6.0% y-t-d (Dec 2018: N3.4 trillion)

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What it means

The Commercial Banking business contributed 88.7% (Sep 2018: 90.3%) to the Group’s gross earnings and 84.2% (Sep 2018: 83.2%) to the Group’s profit before tax.

CEO, FirstBank and Subsidiaries, Dr. Adesola Adeduntan, confirmed that the Commercial Banking boosted the performance of the group contributing an 18.6% year-on-year (y-o-y) growth in profit before tax.

He said, “In line with our commitment, we have continued to improve our asset quality while further enhancing the group risk management and controls. These deliberate steps continue to yield positive results with the NPL ratio further declining to 12.4% and impairment charges significantly decreasing by 63.0% y-o-y. 

“As a result, cost of risk is down to 1.8% from 4.5% in the previous year, providing a stronger platform for enhanced future profitability. Clearly, we are in the final phase of addressing the legacy asset quality challenges and achieving our guidance of a single-digit NPL ratio by the end of the year.”

Adeduntan added that the bank would remain focused on transforming its business to a leading transaction-led institution, as highlighted by the 26.7% y-o-y growth in fees and commission-driven by 45.9% y-o-y growth in electronic banking fees.

“This has positively impacted non-interest income even as we continue to ramp up customer acquisition and retention through improved offerings from agents, digital, trade and transaction banking products.”