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FBNH: Growth in non-interest income, reduced impairment charge, support profit growth

FBNH released FY 2019 audited numbers which showed an increase in Pre-tax profit to N83.6 billion compared to N73.6 billion reported in its earlier released unaudited numbers.



FBNH: Growth in Non-Interest Income, reduced Impairment Charge support profit growth

FBNH released FY 2019 audited numbers yesterday which showed an increase in Pre-tax profit to N83.6 billion, compared to N73.6 billion reported in its earlier released unaudited numbers.

FBNH’s Interest Income grew marginally, up 1.6% y/y and largely in line with our forecast mainly due to a decline in yields on customer loans. While Net Loans to customers were up 10.9% y/y, Interest Income on those loans declined 6.8%.


Interest Expense also grew marginally, up 1.4% y/y despite an 11.9% y/y growth in Interest Bearing Liabilities reflecting a decline in funding cost on the back of the low-interest rate environment. Net Interest Income was up 1.7% y/y. Overall, NIMs declined to 7.7% in December 2019 compared to  7.8% in December 2018.

Net Fee and Commission Income grew moderately, up 11.2% y/y. The y/y growth was mainly on the back of significant growth in E-banking income (up 41.2%y/y) and credit-related fees (up 104.7% y/y), letters of credit commission (up 49.0% y/y) and other fees and commission (up 30.1% y/y).

[READ MORE: INSURANCE: NAICOM mulls extension of recapitalisation exercise)

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Other Income (Net Insurance Premium, Net gains on investment securities, Net gains or loss on financial instruments, Dividend Income, Other Operating Income) was up 32.9% y/y.

Impairment charge declined 41.5% y/y to N51.1 billion, compared with N87.5bn for FY 2018, resulting in a decline in Cost of Risk (COR) to 2.6% compared to 4.3% for FY 2018. The bank’s NPL ratio declined further to 9.9% from 24.7% for FY 2018 The bank’s management had advised that NPL will drop below 10% by year end.

OPEX increased significantly, up 18.% y/y. This, coupled with only a marginal increase in total operating income led to a deterioration in cost to income ratio (ex-provisions) to 73.0% in FY 2019 compared to 63.4% in the same period of 2018. The y/y growth in opex was mainly on the back of significant growth on other operating expenses, up 21.2% y/y driven by mainly by advert and corporate promotions costs (up 135.5% y/y) and operational and other losses which grew to N20.4bn in December 2019 from only N6.9bn in December 2018. Management, however, noted that majority of the costs are one-off. We forecast CIR declining to 63.4% in 2020e.

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Capital Adequacy Ratio (CAR) of 15.5% was reported for FBN Nigeria, almost at par with the regulatory limit of 15.0% and compared with 17.3% for FY 2018. We are concerned about FBN’s capital ratios especially in the light of CBN’s 65% minimum LDR ratio which may likely be increased further. Current macro conditions also call for worry given reduced oil prices and talks of devaluation which will bring issues of asset quality and reduced capital for many banks. Detailed analysis as to how we expect this to impact FBNH will be communicated in our update note.

Pre-tax profit was up 13% y/y while Net profits were up 4% y/y bringing FY 2019 RoAE to 12.4% compared to 9.7% for FY 2018.


The bank announced a dividend of N0.38/s, implying FY 2019 dividend yield of 9.5% based on yesterday’s closing price of N4.00/share.


Despite a strain in capital which caps our near-term growth outlook, we still find valuations compelling (PBV 0.2; PE 2.1). We have a Buy rating on the stock with a target price of N12.13/s. Current price: N4.00/s. We expect a tough 2020e for our coverage banks given the impact of COVID-19 and the decline in oil prices.

FBNH: Growth in Non-Interest Income, reduced Impairment Charge support profit growth

The group will host a teleconference call with analysts and investors on the audited results for the full year 31 December 2019 on Wednesday 08 April 2020 at 12:00 pm UK / 12:00 pm Lagos / 07:00 am New York / 1:00 pm Johannesburg & Cape Town.

The teleconference call facility can be accessed by dialling: +234 1 277 6330 (Nigeria); 0800 279 7204 or +44 330 336 9411 (United Kingdom); 888 254 3590 or +1 323 994 2093 United States); and 0800 980 520 or +27 11 844 6118 (South Africa) and then entering the following confirmation code: 8572467#.




Member of the Nigerian Stock Exchange,

First City Plaza, 44 Marina,

PO Box 9117,

Lagos State.

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Economy & Politics

Skills Africa needs for sustainable development

Over a billion people with 5 official working languages – Arabic, English, French, Portuguese and Swahili , will again celebrate Africa Day this year.



From Addis Ababa to Durban, Lagos to Cairo, from the Sahara Dessert to the Nile River, over a billion people with 5 official working languages – Arabic, English, French, Portuguese and Swahili – will again celebrate Africa Day this year.
A day to remember, reminisce and celebrate successes recorded against the struggles for independence, freedom from apartheid and colonization. Although, with the new normal brought about by Coronavirus, the 2020 celebrations would be quite unlike previous years.

The Africa Union (Formerly OAU) has recorded good milestones in terms of political independence and self-governance. So now is a good time for Africa to reflect on our independence.


On reading the objectives of the Africa Union (AU), words like independence, territorial integrity, human rights, security, cooperation are splattered across the pages. Significantly, none of the AU objectives seeks economic autonomy for Africa or her member states. This is a fundamental flaw which speaks directly to Africa’s issue of having a large population without the requisite skills for growth.

Our education is largely dependent on the western curriculum and narrative. There is hardly any major infrastructure, industrial or development project in Africa with 100% African content in manpower, materials or capital.

(READ MORE: Nigerian economy going into recession, might contract by -8.9% – Finance Minister)

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It is now well established and more evident that political independence without economic independence is like a car without an engine. Economic empowerment is the nucleus of national development. No fewer than 14 West African countries currently use CFA Franc, with some having used the currency for at least 75 years. This goes beyond nameplate as the Bank of France holds half of those countries’ currency reserves. This is effectively cutting their growth capacity by 50%.

Skill Up Africa for Sustainable Development

8 of those 14 countries will relinquish the CFA franc for the new ECOWAS currency, ECO (to be launched in July 2020). However, there is no indication that the affected African leaders would ask France for compensation for the years of economic sabotage to their countries. The introduction of the ECO was to bring a ray of hope, but we hope the real difference would not just be in the colour of the currency. This is because the ECO will not be autonomous but would be pegged against the Euro.

France is not alone in the economic sabotage of Africa, they are in the good company of the United Kingdom, the US and Belgium, to mention a few. However, are these foreign countries to blame? Africa got her independence, but African leaders refuse to be independent and the dependent mentality is also enshrined in the AU objectives.

One of the AU objectives states “to work with relevant international partners in the eradication of preventable diseases and the promotion of good health on the continent.” The statement looks good superficially, but it is enlaced with aid orientation, the lack of drive for self-reliance, and a beggarly mindset.


(READ MORE: Sahara Group donates medical equipment to support fight against COVID-19)


Let us educate Africa to pursue the development of its people, with core skills that are necessary to deliver the quality of the progress and growth that Africans desire. African construction companies should make African infrastructure and 100% African content should be the target in automobile engineering, healthcare, information technology,

Necessity is said to be the mother of invention. The need for Africans to lead Africa out of poverty, tyranny and underdevelopment is a matter of great importance, far beyond just necessity. Every African must desire to get skilled, and not just education, as we currently have it. We must have the competence to develop our agriculture system, mine Africa’s natural resources and add value by processing them locally.

Africa Day would only be truly worthy of celebration when African people and countries are skilled enough to accomplish our dreams of self-reliance and economic independence.

Article written by Olatunde Akintola. Olatunde is a Fellow of the Institute of Chartered Accountant of Nigeria and alumni of Manchester Business School. He writes from Lagos.

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Tech News

Tiktok’s In-App revenue surges amid lockdown

ByteDance Ltd’s brainchild, TikTok, together with Douyin ranking tops globally on mobile apps with the highest revenue generated for the month of April.



TikTok announces $250 million pledge to aid combat coronavirus, Does YouTube stand a chance against TikTok?

The meme-making business has proven to be worth all the fuss, with TikTok, as well as its Chinese twin app, Douyin, ranking tops globally on mobile apps with the highest revenue generated for the month of April.

Sensor Tower, notes that just in the first quarter of this year, ByteDance Ltd’s brainchild, TikTok, together with Douyin which caters to the Chinese market, generated 315 million downloads globally, from the 187 million it had just a year earlier.


The ranking, which was based on their in-app purchases, reveal a tenfold increase, as the companies garnered a whopping $78 million in revenue. The Chinese market is said to have contributed 86.6% of Douyin’s revenue, followed by the U.S market which contributed 8.2%.

This places them ahead of older names like Netflix & YouTube. As opposed to using subscriptions like these established brands, TikTok and Douyin allow users to purchase virtual currency to spend on their favorite content creators.

(READ MORE: Does YouTube stand a chance against TikTok?)

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While ByteDance is exploring the world of online commerce, it continues to rely on advertising as its primary income source. However, Emarketer projects that more than 75 million US social network users will make at least one purchase from a social channel in the year 2020.


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Business News

Sanwo-Olu to virtually inaugurate projects as he presents scorecard of first year in office

Some of the projects to be commissioned will be done virtually, while a few will be done on-site.



COVID-19: Lagos State to begin curfew on Sunday to disinfect metropolis, Lagos state government discharges 7 more coronavirus patients, Lagos state will reverse to full lockdown, Sanwo-Olu to virtually inaugurate projects as he presents scorecard of first year in office

Lagos state governor, Babajide Sanwo-Olu, will virtually inaugurate housing, education, and road projects on May 29, as part of activities to mark his first year in office.

According to a report by NAN, the projects are part of the government’s efforts to renew infrastructure in critical sectors and to make the commercial centre a smart city.


Some of the projects to be commissioned will be done virtually, while a few will be done on-site.

The projects

Lagos state Commissioner for Information and Strategy, Mr Gbenga Omotoso, listed some of the projects in an official statement. He said:

”In the education sector, Sanwo-Olu will conduct virtual inauguration of completed classroom blocks in Maya Secondary School, Ikorodu; Eva Adelaja Junior School, Bariga; and Saviour Primary School, Ifako-Ijaiye, among others. 

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“Virtual inauguration of completed works such as the Concrete Jetty in Baiyeku, Ikorodu, Aradagun-Ajido- Epeme Road in Badagry, and the Maryland Signalisation project also form part of the itinerary to commemorate the anniversary.”

(READ MORE: Lagos increases health workers’ allowances, commissions local production of face masks)

Omotoso also stated that the Governor would inaugurate the 360-unit Lagos Homes in Ikorodu, and then visit Igbogbo Baiyeku IIB Estate, Lekki, and the Courtland Villas on Femi Okunnu Estate during the week.

Plans for celebrating Children’s Day

 In a related development, Governor Sanwo-Olu will deliver an address on Wednesday May 27 to mark the children’s day celebration, and the 53rd anniversary of Lagos state.

Omotoso, however, noted that all celebrations would be kept on the low in reflection of the current challenges and realities of the COVID-19 pandemic.


Presenting one-year scorecards

The activities for the week are expected to begin with press briefings at J.J.T Park in Alausa on May 27, where members of the State Executive Council will present their scorecards in line with the six pillars of the state’s T.H.E.M.E.S Agenda.


(READ MORE: Lagos Medical workers call off strike, as IG sends strong warning to security agencies)

According to the information commissioner, there will be two sessions of press briefings daily from May 27 to June 3, as the Governor considers it expedient to render a stewardship account of the last one year.

“Three special publications highlighting the achievements of the Babajide Sanwo-Olu administration and testimonies of beneficiaries of various initiatives of the government are slated for presentation to the public by the governor and his Deputy, Dr Obafemi Hamzat,” he added.

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