With Assets of N5.2tn, Shareholders’ Funds of N678bn, FBN Holdings Eyes Improved Returns


Goddy Egene

FBN Holdings Plc is set to consolidate on its 2017 performance and deliver stronger results going forward, given the healthy financial indicators and the strategies being implemented by the board and management of the company.

With the financial group’s strong assets base of N5.2 trillion, up from N4.7 trillion in 2016, shareholders’ funds of N678.2 billion and increased patronage by customers, among other factors, market analysts after the company’s annual general meeting on Tuesday, were of the view that FBN Holdings was on track for better returns.

A review of FBN Holdings’ 2017 results showed gross earnings of N595.4 billion, up from N581.8 billion in 2016. The group also recorded a net interest income of N331.5 billion, up by 8.9 per cent over N304.4 billion recorded in 2016.

Impairment charges for credit losses also dropped by 33.5 per cent to N150.4 billion, from N226 billion in 2016.

The financial institution’s operating expenses, however, rose by 7.7 per cent to N238 billion, from N221 billion in the previous year, resulting in an increase in its cost-to-income ratio to 55.5 per cent in 2017, from 47 per cent in the previous year.

Consequently, profit before tax jumped by 147.6 per cent to N56.8 billion, compared with N22.9 billion in 2016.

But profit after tax (PAT) grew faster by 178.9 per cent to N47.8 billion from N17.1 billion in 2016, while earnings per share improved from 39 kobo to 121 kobo.

Based on its PAT for 2017, FBN Holdings rewarded its shareholders with a dividend of N8.974 billion, translating to 25 kobo per share.

A further assessment of the results showed that non-performing loans dropped from N584.2 billion to N520 billion, while the group’s NPL ratio also improved from 24.4 per cent to 22.8 per cent.

Its capital adequacy ratio, on the other hand, stood at 17.1 per cent compared with 17.8 per cent in 2016.

Customer deposits, which are a reflection of customers’ preference for the franchise, rose from N3.10 trillion to N3.14 trillion.

Relative to its results in 2016, market analyst said the financial group was on the mend, but cautioned that its management should not deviate from its cost containment strategy, which saw FBN Holdings record a cost-to-income ratio of 47 per cent in 2016.

This, they reckoned, was necessary given the decline in treasury bill yields and the impact this would have on the net interest income of the flagship subsidiary of the group, First Bank of Nigeria Limited (FirstBank).

Also, mention was made on the need to recover and reduce NPLs closer to the regulatory limit of 5 per cent, as this would assure shareholders of improved returns in 2018.

The Group Managing Director of FBN Holdings Plc, Mr. UK Eke, had said during the group’s annual general meeting that the initiatives they put in place were producing encouraging results ahead of their projections.

He assured shareholders that the company would intensify efforts to recover all NPLs.

According to him, loan recovery has been a core focus of the leadership team of FirstBank, pointing out that a special committee had been set up to address it, just as an asset management unit had been created for the purpose.

“Even though we have not recorded a full resolution of our NPLs, we have made significant progress in dealing with a number of these loans and more fundamentally, ensured a strong asset quality from recent credits. As a result, NPLs for the period declined from 24.4 percent in 2016 to 22.8 percent in 2017,” he said.

Similarly, the Chairman of FBN Holdings, Mr. Oba Otudeko, said FirstBank sustained its leadership position in the e-payment space, emerging as the first financial institution in Nigeria and West Africa to issue 10 million cards to customers.

He added that the bank was recognised as the first financial institution in Nigeria to achieve an electronic transaction volume of 100 million in a month.

Otudeko promised shareholders that FBN Holdings would consolidate on the progress made in the previous year to deliver a strong and sustainable performance that enhances returns to shareholders.