America’s largest oil companies, Exxon Mobil and Chevron, posted their worst losses in modern history yesterday, as the COVID-19 pandemic and a glut in crude oil destroyed the demand for energy products in the second quarter of 2020.

Exxon Mobil, in its latest earnings results, revealed a $1.1 billion loss in Q2, 2020, according to a copy of the results that were seen by Nairametrics.

What you should know: The COVID-19 pandemic and oversupply of crude oil in the global oil market significantly impacted Exxon Mobil’s and Chevron’s Q2, 2020 financial results, with lower prices, margins, and sales volumes.

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Chevron Corporation also declared a whopping loss of about $8.3 billion, triggered in part by $5.2 billion write-downs on assets that the company saw had lost relevance and value.

The poor earnings results recorded by America’s two oil juggernauts have caused their stock prices tank to record lows.

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“Look, it was a challenging quarter,” Pierre Breber, Chevron’s chief financial officer, said on a call with investors on Friday. “We had very volatile industry conditions.”

The earnings results by the two oil giants marked a dramatic reversal from earnings recorded in 2019. During Q2, 2019, Exxon Mobil earned $3.1 billion, while Chevron also made $4.3 billion.

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The two oil giants however tried to downplay the recorded losses as just a flash in the pan, since the major cause was from macros, beyond their businesses since the global restriction to contain the pandemic affected most industries around the world. Neither Exxon Mobil CEO, Darren Woods nor Chevron CEO, Michael Wirth joined the Friday earnings calls though doing so might have helped soothe the nerves of traders and global investors.

FBN Holdings Plc. (“FBNH” or “FBNHoldings” or the “Group”) today announces its unaudited results for the six months ended June 30, 2020.

Income Statement                                                          

• Gross earnings of ₦296.4 billion, up 5.8% year-on-year (y-o-y) (Jun 2019: ₦280.3 billion^[1])
• Net-interest income of ₦131.3 billion, down 7.4% y-o-y (Jun 2019: ₦141.7 billion¹)
• Non-interest income of ₦80.1 billion, up 46.8% y-o-y (Jun 2019: ₦54.6 billion¹)
• Operating income of ₦211.4 billion, up 7.7% y-o-y (Jun 2019: ₦196.3 billion¹)
• Impairment charge for credit losses of ₦30.7 billion, up 38.6% y-o-y (Jun 2019: ₦22.1 billion)
• Operating expenses of ₦139.2 billion, up 0.9% y-o-y (Jun 2019: ₦137.9 billion¹)
• Profit before tax of ₦41.4 billion, up 14.3% y-o-y (Jun 2019: ₦36.2 billion¹)
• Profit after tax^[2] of ₦49.5 billion, up 56.3% y-o-y (Jun 2019: ₦31.6 billion¹)

Statement of Financial Position 

• Total assets of ₦7.1 trillion, up 14.9% year-to-date (y-t-d) (Dec 2019: ₦6.2 trillion)
• Customer deposits of ₦4.4 trillion, up 8.8% y-t-d (Dec 2019: ₦4.0 trillion)
• Customer loans and advances (net) of ₦2.0 trillion, up 7.7% y-t-d (Dec 2019: ₦1.9 trillion)

Key Ratio 

• Post-tax return on average equity 14.5% (Jun 2019: 11.6%)^[3]
• Post-tax return on average assets 1.5% (Jun 2019: 1.1%)³
• Net-interest margin 6.8% (Jun 2019: 7.5%)
• Cost to income ratio 65.8% (Jun 2019: 70.3%¹)
• NPL ratio 8.8% (Dec 2019: 9.9%)
• 16.5% Basel 2 Capital Adequacy Ratio (FirstBank Nigeria: Dec 2019: 15.5%)
• 17.2% Basel 2 CAR (FBNQuest Merchant Bank) (Dec 2019: 17.1%)

Notable Developments 

• Completed the sale of 65% FBN Holdings Plc ownership in FBN Insurance Limited to Sanlam Emerging Markets Limited; effective June 1, 2020
• FBN Holdings injected additional Tier 1 capital into FirstBank boosting Capital Adequacy Ratio to 16.5% (excluding profit for the year)
• Firstmonie Agent banking network grown to over 59,000, further reaffirming FirstBank’s undisputed agent banking leadership, strong retail franchise and wide coverage

Financial Performance Highlights 

READ MORE: FBN Holdings Plc reports gross earnings of N293.3 billion for the six months ended 30 June 2018

Commenting on the results, UK Eke, the Group Managing Director of FBNHoldings said:

“The H1 2020 financial results are impressive and reconfirm our consistent focus on enhanced shareholder value. Despite the difficult operating environment, the H1 results demonstrate our resilience and capacity to deliver on long-term ambitions.  

The 56.3% y-o-y growth in profit after tax for the period is a testament to the strength of our organisation to continually deliver exceptional services to our customers in these unprecedented times. We have been able to achieve this feat by leveraging our agent banking network, innovative e-banking capabilities, and operational efficiency utilizing technology.  

During the quarter, we successfully divested from the underwriting (insurance) businesses to focus on our banking operations. We are confident this will enhance greater value to our stakeholders and strengthen the Group’s resolve to consolidate its leadership of the banking sector. Following the divestment, FBNHoldings injected Tier 1 capital into FirstBank, effectively increasing its CAR to 16.5%. This provides a comfortable buffer against regulatory requirements with the potential to support any emerging business opportunities. 

Looking ahead, we remain cautious, but we are confident that our business is fundamentally strong to withstand any future challenge towards enhanced performance”.  

Business Groups:   

Commercial Banking 

• Gross earnings of ₦278.7 billion, up 6.1% y-o-y (Jun 2019: ₦262.8 billion)
• Net interest income of ₦126.1 billion, down 8.2% y-o-y (Jun 2019: ₦137.4 billion)
• Non-interest income of ₦72.8 billion, up 48.7% y-o-y (Jun 2019: ₦49.0 billion)
• Operating expenses of ₦132.1 billion, up 0.7% y-o-y (Jun 2019: ₦131.2 billion)
• Profit before tax of ₦36.4 billion, up 9.2% y-o-y (Jun 2019: ₦33.3 billion)
• Profit after tax of ₦32.6 billion, up 21.9% y-o-y (Jun 2019: ₦26.7 billion)
• Total assets of ₦6.8 trillion, up 16.5% y-t-d (Dec 2019: ₦5.9 trillion)
• Customers’ loans and advances (net) of ₦2.0 trillion, up 7.2% y-t-d (Dec 2019: ₦1.9 trillion)
• Customers’ deposits of ₦4.2 trillion, up 8.2% y-t-d (Dec 2019: ₦3.9 trillion)

Commenting on the results Dr. Adesola Adeduntan, the Chief Executive Officer of FirstBank and its subsidiaries said:

“Over the period, the commercial banking group increased its y-o-y growth in gross earnings and profit before tax by 6.1% and 9.2% respectively, despite the economic shutdown during the quarter and varying degrees of challenges in the operating environment. Notwithstanding, we have continued to provide services to our customers with minimal disruption in a safe environment, supported by seamless transactions through our increasing agent banking network and digital platforms (FirstMobile and USSD). Furthermore, continuous focus on operational efficiency remains a priority, as improvement in non-performing loan ratio has further been sustained. 

As the economy reopens gradually, in Nigeria and other key markets as in the rest of the world, we are adopting a pragmatic approach with optimism on propelling our performance for enhanced profitability through customer led innovation and disciplined execution.” 

Merchant Banking & Asset Management (MBAM) / FBNQuest 

• Gross earnings of ₦17.5 billion, up 3.1% y-o-y (Jun 2019: ₦16.9 billion)
• Profit before tax of ₦6.1 billion, up 107.6% y-o-y (Jun 2019: ₦2.9 billion)
• Total assets of ₦330.8 billion, up 33.1% y-t-d (Dec 2019: ₦248.6 billion)

Fidson Healthcare reported revenues of N4.4 billion in the second quarter of 2020 compared to N3.8 billion same period in 2020.

Key highlights – 2020 Q2

• Revenues surged to N4.69B  +24.1% year YoY
• Revenues from Ethical Unit rose to N2.5 billion +37.9% YoY
• Revenues from over the counter drug sales rose to N1.94 billion -4.2% YoY
• Pre-tax profits more than doubled in the quarter to N512.7 million +166% YoY

Bottom Line: Fidson got a major boost from increase in its Ethical unit. The ethical division includes prescription drugs. Pharmaceutical companies have recorded a major boost in revenues in the last few months mostly due to COVID-19.

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