First Bank of Nigeria Holdings (FBNH’s) says it recorded increase in gross earnings short of N1 trillion in 9Months (9M) 2023, settling at N985.58 billion from N547.20 billion in 9M 2022, representing +80.11 earnings growth.
This came from interest income and non-interest income items spread across investment securities, loans and advances, fees, and commission income.
According to the lender, interest income had a higher contribution at 66 percent relative to 36 percent from non-interest income, reflecting that core operation drove the income growth.
Analysts from Proshare said the growth in non-interest income stemmed from net gains from financial instruments at FVTPL (N246.08bn), net gain on sale of investment securities (N43.55bn) and fee and commission income (N143.46bn).
A further breakdown showed that the commercial banking segment contributed 93.5 percent of earnings, the merchant banking and asset management businesses accounted for 6.10 percent, while others added only 0.30 percent.
Unlike other banks with hefty revaluation gains, FBN holdings had an N117. 64 billion revaluation loss in 9M 2023 from N816 million revaluation gain in 9M 2022.
Analysts believe the group’s five-year Eurobond issued in 2020 and other foreign borrowings contributed to the significant revaluation loss incurred during this period.
Net interest income rose by +45.3 percent to N140.37 billion in Q3 2023 from N96.62 billion in Q3 2022 as interest income rose by +74.0 percent to N250.52 billion over N110.15 billion interest expense.
Profit before tax increased by +61.1 percent to N64.07 billion in Q3 2023 from N39.77billion in Q3 2022 and post-tax profit advanced by +42.0 percent to N49.24 billion in Q3 2023
Other Operating Expenses grew by +49.3 percent to N62.94 billion in Q3 2023 and personnel expenses rose by +62.0 percent to N47.97 billion in Q3 2023.
Further breakdown show that impairment charge rose by +65.0 percent to N24.75 billion in Q3 2023 from N15.00 billion in Q3 2022.
Fees and commission income increased by +36.0 percent to N54.61billion in Q3 2023 from N40.15 billion in Q3 2022, while fees and commission expenses declined by -19.4percent to N7.52 billion.
Income tax expense glided by +191.4percent to N14.81billion in 9M 2023 from N5.08bn in 9M 2022.
According to the analysts, working its way up the Tier 1 Banking ladder, FBNH has come far from where it was twenty-four months ago but still has yards to go.
“The Holdco has diligently cut its operating costs to income ratio (CIR) from over 69.3percent in 2021 to 54.4percent in 9M 2022. The lender has equally muscled down on nonperforming loans (NPLs) and kept it under the statutory 5percent maximum.
“Nevertheless, a few macro and microeconomic shifts will shape the outcomes for the group in months to come, “ the Proshare analysts stated.
First Bank of Nigeria Holding Company (FBNH) had a pleasant year in 2023. The year was some distance from the less flattering financial state in 2021 when its management was embroiled in several internal and external battles. The oldest lending institution in Nigeria survived an equity raider’s onslaught in 2021, a regulator-inspired board of directors’ change (also in 2021), and a struggle to keep operating costs down and loan-to-deposit ratio (LDR) above the statutory threshold of 65percent. FBNH has kept its head above turbulent fiscal waters in a generally tough period for the banking sector.
The financial lender climbed up on Proshare’s 2022 and 9M 2023 Tier 1 Bank Strength Index (PBSI), demonstrating resilience despite sharp monetary policy revisions. A cash-tightening currency redesign policy orchestrated by the Central Bank of Nigeria (CBN) in Q1 2023 left most banks with public trust deficits and impaired lending capacity. Banking activities were simply sideswiped in the first quarter of 2023.
Despite inflationary pressures, FBNH’s profitability mirrored gross earnings growth, with the profit before tax and post-tax profit soaring by +156.26 percent and +159.22 percent to N270.33bn and N236.42bn respectively. The income from sales of investment securities, gains from financial instruments, dividend income, and other operating income suppressed the +33.31% percent rise in personnel expenses and a +35.07 percent rise in operating expenses. The digital operations of the Holdco generated N48.79bn income in 9M 2023 from N39.98bn in 9M 2022, showing an improvement in digital penetration and product patronage.
The substantial profit growth nudged earnings per share to N6.54k in 9M 2023 from N2.51k in 9M 2022.
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