FBN Holdings Plc Reports Strong 9-Month 2023 Financial Results

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FBN Holdings Plc (FBNH) released its unaudited financial figures for the first nine months of 2023, revealing a remarkable 160.6% year-on-year increase in earnings per share, reaching NGN6.54, compared to NGN2.51 in the same period in 2022. This significant earnings growth can be attributed to substantial increases in both funded (up 71.1% year-on-year) and non-funded (up 108.5% year-on-year) income streams. In the third quarter of 2023 (Q3-23), FBNH’s standalone earnings per share reached NGN1.35, marking a 40.6% year-on-year increase from NGN0.96 in Q3-22.

 

In the first nine months of 2023, FBNH achieved a 71.1% year-on-year increase in interest income, totaling NGN633.80 billion. This growth, in line with trends in the banking sector, was primarily driven by higher yields in the fixed-income market and an increase in earning assets (up 30.3% year-to-date to NGN8.33 trillion). Consequently, the group’s earnings yields increased by 250 basis points year-on-year to 10.5% during this period. Notably, the group saw higher income from loans and advances to customers (up 53.9% year-on-year to NGN414.03 billion), investment securities (up 132.1% year-on-year to NGN186.72 billion), and loans and advances to banks (up 72.1% year-on-year to NGN33.06 billion).

 

On the flip side, interest expenses surged by 112.0% year-on-year to NGN256.11 billion, primarily due to increased costs on deposits from customers (up 125.8% year-on-year to NGN174.44 billion) and financial institutions (up 114.4% year-on-year to NGN54.43 billion), driven by elevated interest rates in the debt market and a deteriorating funding mix. In the same vein, the group incurred higher costs on its borrowings (up 49.9% year-on-year to NGN27.23 billion). As a result, net interest income, excluding Loan Loss Expense (LLE), expanded by 19.4% year-on-year to NGN268.93 billion. The group’s net interest margin (NIM) also increased by 80 basis points year-on-year to 6.2% in the first nine months of 2023.

 

The group’s non-interest income experienced significant growth, up 108.5% year-on-year to NGN327.29 billion, driven by higher gains from investment securities (up 61.6% year-on-year to NGN43.55 billion), net fees and commission income (up 30.8% year-on-year to NGN118.98 billion), and foreign exchange (FX) revaluation gains (up 10.24 percentage points year-on-year to NGN246.08 billion). These gains were sufficient to offset the losses of NGN96.67 billion incurred on FX trading, with fees and commission income being a major driver of non-interest income growth in the quarter (up 17.9% quarter-on-quarter to NGN45.28 billion).

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Operating expenses also increased by 33.3% year-on-year to NGN352.28 billion, primarily due to higher personnel expenses (up 33.3% year-on-year to NGN113.19 billion), AMCON levy (up 19.5% year-on-year to NGN70.83 billion), depreciation and amortization (up 19.3% year-on-year to NGN24.45 billion), and NDIC premium (up 7.3% year-on-year to NGN11.09 billion). Despite the rise in operating expenses, the group’s operating income grew faster, resulting in a lower cost-to-income ratio (excluding Loan Loss Expense) of 56.6%, down from 71.5% in the previous year.

 

Overall, FBNH’s profitability in the first nine months of 2023 was robust, with Profit After Tax (PAT) increasing by 156.3% year-on-year to NGN270.33 billion. The Return on Average Equity (ROAE) and Return on Average Assets (ROAA) for the period settled at 26.6% and 2.5%, respectively, reflecting substantial growth from the prior year’s figures.

 

FBNH management will conduct an investor call on October 30, 2023, at 3:00 pm Lagos time to discuss these results and prospects. The strong performance in 9M-23, particularly in core banking and e-banking activities, is promising, and the outlook for 2023 is positive, driven by the elevated yield environment, revaluation gains, and the reduction of the Cash Reserve Ratio (CRR) for merchant banks from 32.5% to 10.0%.


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