FBN Holdings has solidified its top-tier status with a robust performance in the 2023 financial year and the first quarter of 2024 (Q1’24), reporting a substantial increase in gross earnings and pre-tax profit by 95.7 percent.
The group achieved N1.6 trillion in gross earnings, nearly doubling the 2022 figure, and its profit before tax surged by 126.86 percent to N350.59 billion.
In Q1’24, FBN Holdings showed even stronger growth, with gross earnings and pre-tax profit increasing by 181.43 percent and 325.15 percent respectively, despite challenges from rising operating costs and foreign exchange impairments.
Analysts credit the Central Bank of Nigeria’s payment of Heritage Bank’s debt for enhancing the outlook for First Bank, reducing forbearance balances on FBN Holdings’ books, and reinforcing its position as a systemically important bank (SIB).
The bank’s impressive performance is attributed to the leadership of former Group Managing Director Dr. Adesola Adeduntan, who stepped down in April after nine years. His successor, a member of the same team, is expected to continue driving positive outcomes.
A detailed analysis of the group’s results indicates an overall positive outlook with improving financial ratios. Interest income contributed 60 percent of the total, while non-interest income, which grew by 153.67 percent to N601.70 billion, was driven by net gains from financial instruments at FVTPL, the sale of investment securities, and fee and commission income. The commercial banking segment led gross earnings, contributing 94 percent, while the merchant bank and asset management segments contributed six percent. Macroeconomic factors, including the depreciation of the naira and aggressive rate hikes, influenced growth in Q1 2024.
The group also reported N66.34 billion in earnings from digital banking in 2023, up 20.41 percent from N55.10 billion in 2022.
On the operational side, customer deposits grew by 49.68 percent to N10.66 trillion, and deposits from banks increased by 70.88 percent to N1.89 trillion. Shareholders’ funds rose by 75.45 percent to N1.75 trillion, driven by significant increases in retained earnings, foreign currency translation reserve, and statutory reserve.
Overall, FBN Holdings’ financial position improved in 2023, with total assets rising by 60.13 percent to N16.94 trillion from N10.58 trillion in 2022.
The group’s improved earnings and profitability positively impacted key valuation metrics, with return on average equity (ROAE) and average assets (ROAA) increasing to 22.60 percent and 2.30 percent respectively, up from 14.50 percent and 1.40 percent in 2022. Return on Equity (ROE) and Assets (ROA) also grew to 45.40 percent and 4.30 percent respectively, with the cost-to-income ratio (CIR) decreasing to 43.10 percent from 60.40 percent in Q1 2023, indicating better cost optimization.
Proshare analysts observed that the group’s loan-to-deposit ratio increased to 62.20 percent, above the 65 percent statutory limit, which exempts it from discretionary CRR debits.
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