Q1 2023: FBN Holdings Plc Core And Non-Core Income Supports Earnings Growth

… grew PBT to NGN56.11 billion

FBN Holdings Plc (FBNH) has today (Friday), announced its Q1-23 unaudited financial report, revealing double-digit expansions across its core (+64.1% y/y) and non-core (+11.8% y/y) income lines.

According to FBNH financial health statement made available to the Nigeria Exchange Limited (NGX) for verification, the company group’s EPS consequently grew markedly by +55.1% y/y to NGN1.38 in Q1-23.

The group recorded a 64.1% y/y growth in interest income to NGN179.61 billion, driven by gains recorded across the loans and advances to customers (+60.4% y/y) and investment securities (+106.8% y/y) contributory lines.

Meanwhile, researchers at Cordros Securities has highlighted that the growth in these income lines was supported by the twin impact of the higher yield environment and the rise in the group’s interest-earning assets (+5.7% YTD to NGN7.38 trillion).

A further x-ray of FBNH report showed that, Interest expense grew by 84.9% y/y to NGN67.76 billion owing to the higher cost incurred on deposits from customers (+88.0% y/y) and financial institutions (+22.1% y/y).

Cordros Securities attributed the higher cost on deposits from customers to the increase in the bank’s deposits (+4.2% YTD to NGN3.95 trillion) amid a slight deterioration in its CASA mix (Q1-23: 82.7% vs 2022FY: 84.8%).

Consequently, the group recorded an expansion in net interest income (+53.6% y/y). Eventually, net interest income ex-LLE closed 48.3% higher year-on-year after taking account of the 93.1% y/y growth in the group’s impairment charges in Q1-23.

Non-interest income advanced by 11.8% y/y to NGN72.33 billion, buoyed by higher gains from investment securities (+114.1% y/y) and net fees and commission income (+29.2% y/y) in the period. Accordingly, operating income rose by 29.9% y/y to NGN167.28 billion.

Operating expenses grew by 20.6% y/y, triggered by increases in the group’s regulatory and personnel costs. Precisely, the group incurred higher costs on personnel expenses (+22.2% y/y), NDIC premium (+135.6% y/y), and AMCON levy (+6.9% y/y) in Q1-23. However, subsequent to the higher operating income than OPEX, the group’s operational efficiency improved as the cost-to-income ratio (ex-LLE) settled at 66.5% (vs 71.6% in the prior year).

The HoldCo’s profit before tax grew by 53.3% y/y to NGN56.11 billion. FBNH’s ROAE and ROAA ultimately settled at 20.1% and 1.9%, respectively.

The group will hold a conference call on Monday (05 June) at 3 pm Lagos time to discuss the results.
Register here https://firstbanknigeria.zoom.us/webinar/register/WN_yqYkfDD_RS6fBeVtzFl6yA#/registration

Cordros Securities further comment that, “We Like that FBNH delivered impressive numbers in the quarter, despite the unfavourable business environment. Over the rest of 2023, we believe the group will sustain the growth momentum across its core and non-core income lines supported by our expectations of a higher interest rate environment and higher income from fees and commission, respectively. Our estimates are under review.