FBN Holdings Reduces Impairment Charges by 52%, Posts N62bn Profit

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Goddy Egene

FBN Holdings Plc has reported a profit after tax of N61.947 billion for the year ended December 31, 2019, showing an increase of 3.8 per cent compared with N59.667 billion posted in 2018.

The financial conglomerate ended the year with net interest income of N286.388 billion, up from N284.168 billion. However, despite the jump in operating expenses from N147.976 billion to N190.364 billion in 2019, FBN Holdings recorded a higher bottom-line, basically due to significant reduction in impairment charges. Specifically, impairment charges declined 52 per cent from N86.911 billion to N41.711 billion in 2019.

But the reduction in impairment charges did not come to many market operators as a surprise as they said it is in line with the bank’s assurance of improved risk management strategy.

The Group Managing Director of FBN Holdings Plc, Mr. UK Eke, had last year said the despite the difficult operating environment, they remained resolute in delivering on their guidance across key metrics including their commitment towards a single digit non-performing loan (NPL) ratio by the end of year.

Also, the Chief Executive Officer of First Bank and Subsidiaries, Dr. Adesola Adeduntan, had last year said that the material progress in their legacy NPL resolutions clearly reflected their resolve towards achieving a single digit NPL ratio by year end.

Speaking to THISDAY in an interview last month, Adeduntan said that when he assumed office in 2016, part of what he said was that they were going to strengthen their risk management capabilities with the goal of reducing the NPLs.

“I said it would be a two-prong approach, we would strengthen those capabilities to ensure that we don’t create or reduce NPL. No matter good your risk management capabilities are because by default the kind of business we do, loans must always go bad from unexpected things. My plan was to revamp risk management capability and the entire risk management architecture to ensure that we keep new NPLs to the barest level possible. And myself and my team were going to focus on the already existing NPL and then work down to the levels that are in line with the Central Bank of Nigeria regulation.

“What we have achieved is successfully reposition the risk management system of the bank and today I am particularly very proud of what we have achieved and it is a combination of the two that has ensured that we have pushed the NPL to single digits,” he said.