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Company Results

FBNHoldings PAT rises 56.3%, as total assets crosses N7 trillion

FBN Holdings unaudited results for the six months ended June 30, 2020.

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FBNHoldings, FirstBank

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”.  

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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)

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Company Results

Dangote Cement incurs N97 billion taxes in 2020

The cement giant incurred its taxes on record.

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One of Nigeria’s largest indigenous companies and the largest by market capitalization incurred a company income tax of N97 billion for the financial year ended December 2020.

This s according to the information contained in its full-year audited financial statements for the period under review.

Dangote Cement Taxes. 2018 was a tax credit.
Source: Nairalytics Research

Why this matters?

Dangote Cement has enjoyed Pioneer Status over the years and has often been criticized for not paying enough taxes despite its mega-profits.

  • The N97 billion incurred in 2020 is the highest company income tax reported by Dangote Cement since it became listed on the Nigerian Stock Exchange.
  • It incurred N49 billion in taxes in 2019 and got a tax credit of N89.5 billion in 2018.
  • Despite incurring N97 billion in taxes during the year, Dangote Cement’s actual tax paid was just N20.9 billion in 2020 compared to N4.6 billion paid a year earlier.
  • Tax incurred in the profit and loss statement is an accounting provision and is not always the actual tax paid in cash.
  • Putting it into context, the dividend paid during the year is N272 billion and interest payments to its creditors totals N48.2 billion.

Improved Cement Revenues

Despite the Covid-19 Pandemic, the Cement Giant reported full-year revenue of N1 trillion, the highest it has ever recorded since it was privatized almost 20 years ago. The company also reported a profit before tax of N373.3 billion only and a profit after tax of N276 billion, its highest since 2018.

Nigeria like most countries in the world has faced a challenging 2020 due to the impact of Covid-19 on the economy, especially the private sector. However, mega-corporations like Dangote Cement appear to have even performed better during the year. The cement industry in general also appears to have performed well during the year as the combined revenue of the top 3, Dangote Cement, Lafarge, and BUA rose to N1.47 trillion from N1.28 trillion.

The impressive result nonetheless, Dangote Cement’s margins remained strong during the year posting a gross profit margin of 57% in line with its 3-year averages. However, the higher taxes incurred in 2020 dropped profit margins to 26.7%. When compared to 2018 when it still enjoyed Pioneer status, the company posted profit margins of about 43%.

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Company Results

Dangote Sugar yearly revenue surge by 33%, announces a dividend of N1.50

Dangote Sugar Refinery Plc. recently declared a 33.0% Year to year growth in earnings to N29.8 billion for the financial year of 2020

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Dangote Sugar Refinery to merge with Savannah Sugar, Dangote was $4.3 billion richer in 2019, Dangote Sugar announces closed period, ban insider shareholders from trading , Dangote Cement: Weak revenue performance, elevated OPEX weigh on earnings

Dangote Sugar Refinery Plc via the Nigerian Stock exchange recently declared a 33.0% Year to year growth in earnings to N29.8 billion for the financial year of 2020

The company also announced a dividend of N1.50 (vs N1.10 total dividend in 2019).

Dangote Sugar’s revenue expanded by 33.0% YoY amid strong volume growth in its 50 kg sugar offering (c.96.0% of total sales).

The company’s impressive outing amazed a significant number of stock pundits despite a surge in tax charges which partially offset some of the positive passthrough from border closures on earnings.

READ: Dangote Sugar Refinery: Revenue soars amid rising cost of sales

Gross margin expanded by 1.31ppts Year to Year to 25.08%, which points to the effects of recent cost-containment measures and the slump in global raw sugar prices in 2020 amid the COVID-19 pandemic.

The raw sugar price dropped to as low $0.09/lb in 2020 and traded c.$0.13/lb on average during 2020 (-4.38% YoY)

What you should know: Dangote Sugar Refinery Plc (the Company) was incorporated as a Public Limited Liability Company on 4 January 2005, commenced operation on 1 January 2006, and became quoted on the Nigerian Stock Exchange in March 2007.

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Its current shareholding is 68% by Dangote Industries Limited and 32% by the Nigerian public.

The principal activity of the Group is the refining of raw sugar into edible sugar and the selling of refined sugar. The Group’s products are sold through distributors across the country.

READ: Buhari to commission phase 1 of brand new refinery this week

That being said, in spite of such impressive results from the N217 billion valued company experienced a surge in operational cost partly due to persistent FX scarcity.

Dangote Sugar reported a four-fold increase in finance cost, which can be largely attributed to the foreign exchange loss in its ordinary business operations, driven by persistent FX shortages and naira repricing at the exchange rate windows.

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