FBN Holdings has delivered impressive financial performance in 2024, posting a 142% YoY growth in pre-tax profit to N862.391 billion.
This strong growth is driven by significant improvements across key financial metrics, despite challenges related to rising interest expenses and increasing impairments.
Key highlights (2024 vs 2023):
- Interest Income: N2.420 trillion +158.40% YoY
- Interest Expense: N1,029 trillion +254.24% YoY
- Net interest income; N1.392 trillion +154.76% YoY
- Net impairment loss on financial assets: N410.810 billion +82.62% YoY
- Net interest income after impairment charge for losses: N980.932 billion +205.26% YoY
- Net fees and commission income: N239.184 billion +27.86% YoY.
- Operating profit: N861.974 billion +142.59% YoY
- Profit after tax: N738.857 billion +138.06% YoY.
- Earnings per share N20.40 +137.49% YoY
- Loans and advances to customers N8.954 trillion +40.80% YoY.
- Cash and Cash equivalents N4.485 trillion +74.31% YoY
- Total Assets N26.542 trillion +56.70% YoY.
- Customers’ deposits N17.288 trillion +62.12%.
- Shareholders’ funds: N2.539 trillion +45.31% YoY
Investor insights & key takeaways
The bank’s interest income growth is impressive, but there is a notable shift in the sources of income:
- Loans and advances to customers grew by 41%, but interest income from loans and advances to customers declined by 13.42% to N1.364 trillion, contributing 56.37% of total interest income. This suggests a moderation in loan yield or a shift in lending strategy.
- Conversely, interest income from securities surged by 205%, contributing 35% of total interest income. This marks a shift towards investment securities, possibly indicating a more cautious lending approach or a strategic pivot towards higher-yield investments in response to market conditions.
Deposit base and funding costs:
- Customer deposits surged by 62% YoY to N17.288 trillion, showing strong customer confidence and the bank’s ability to attract deposits, providing a solid liquidity cushion.
- However, the interest expense on these deposits rose by 135%, making up 58% of total interest expenses.
This signals that while the bank has grown its deposit base, it is facing higher funding costs, likely due to increased competition or rising interest rates.
Rising credit risk:
- The 108% increase in impairments on loans and advances to N362.767 billion indicates growing credit risk or possible stress in certain sectors or among borrowers.
While impairments are manageable for now, the trends in loan quality and non-performing loans (NPLs) should be watched as they can affect profitability in the future.
Operational performance and strategic insights:
Despite the challenges faced by the bank, particularly with rising interest expenses and higher impairments, the bank has delivered impressive operational performance:
- The bank posted a remarkable 205% growth in net interest income after impairments, signaling strong management of its interest-bearing assets and liabilities, even with higher funding costs and rising loan impairments.
- The impressive growth in net fees and commission income reflects the bank’s ability to generate non-interest revenue, which helps diversify its income streams and reduce reliance on interest income alone.
- The net gains from financial instruments (N641.870 billion) also contributed significantly to the bank’s operating performance.
Overall, this strong performance in the face of rising expenses and impairments suggests strategic adaptability and could indicate a positive long-term outlook, provided these trends continue to balance out in future periods.
The bank’s share price experienced a significant decline of 27% YtD in 2024, in stark contrast to the impressive 116% YtD gain in 2023.
As of January 30, 2025, the share price closed at N29.10, reflecting a YtD return of 3.74% for 2025.
Overall, FBN Holdings has posted impressive financial results, demonstrating strong profit growth and effective diversification of revenue.
However, the rising impairments, increased funding costs, and declining share price reflect challenges that investors must monitor closely.
