FBN Holdings Plc declares N55.4bln Profit After Tax in 9 Months



…as Folake Ani-Mumuney Appointed Non-Executive Director

FBN Holdings Plc. (“FBNH” or “FBNHoldings” or the “Group”) today announces its unaudited results for the nine months ended 30 September 2017.

 Income Statement                                                        

  • Gross earnings of N2 billion, up 5.2% year-on-year (y-o-y) (Sept 2016: N417.4 billion)
  • Net-interest income of N3 billion, up 25.3% y-o-y (Sept 2016: N202.9 billion)
  • Non-interest income of N0 billion, down 43.5% y-o-y (Sept 2016: N131.0 billion)[1]
  • Operating income of N1 billion, down 1.7% y-o-y (Sept 2016: N333.9 billion)
  • Impairment charge for credit losses of N6 billion, down by 14.9% y-o-y (Sept 2016: N114.7 billion)
  • Operating expenses of N3 billion, up 8.4% y-o-y (Sept 2016: N161.8 billion)
  • Profit before tax of N4 billion, down 3.5% y-o-y (Sept 2016: N57.5 billion)
  • Profit after tax N8 billion, up 7.8% y-o-y (Sept 2016: N42.5 billion)

 Statement of Financial Position

  • Total assets of N9 trillion, up 2.7% year-to-date (y-t-d) (Dec 2016: N4.7 trillion)
  • Customer deposits of N0 trillion, down 5.3% y-t-d (Dec 2016: N3.1 trillion)
  • Customer loans and advances (net) of N0 trillion, down 1.9% y-t-d (Dec 2016: N2.1 trillion)

 Key Ratios

  • Post-tax return on average equity of 10.1% (Sept 2016: 9.4%)[2]
  • Post-tax return on average assets of 1.3% (Sept 2016: 1.2%)2
  • Net-interest margin of 8.8% (Sept 2016: 7.5%)2
  • Cost to income ratio of 53.4% (Sept 2016: 48.4%)[3]
  • NPL ratio[4] of 20.1% (Sept 2016: 24.9%, Dec 2016: 24.4%)
  • 4% liquidity ratio (FirstBank (Nigeria) (Sept 2016: 54.3%, Dec 2016: 52.7%)
  • 2% Basel 2 CAR[5] (FirstBank (Nigeria) (Sept 2016: 15.4%, Dec 2016: 17.8%)
  • 1% Basel 2 CAR (FBN Merchant Bank) (Sept 2016: 28.9%, Dec 2016: 22.6%)

Notable Developments

  • Leadership changes across the Group:
  • FBNHoldings:
  • Seye Kosoko appointed as Company Secretary, FBN Holdings Plc, subject to regulatory approval, as Tijjani Borodo retires
  • Commercial Banking Group:
  • Tosin Adewuyi, appointed Executive Director, Business Development, FBNBank UK
  • Insurance Group:
  • Babatunde Mimiko appointed, Executive Director, FBNGeneral Insurance
  • Ekpe Ukpabio appointed, Executive Director, FBN Insurance Ltd
  • Folake Ani-Mumuney, Bode Opadokun and Seye Kosoko, all appointed Non-Executive Directors of FBN Insurance Brokers Ltd, subject to regulatory approval
  • FirstBank acquires the balance of 25% equity holdings in FBNBank DRC Ltd, making it a wholly owned subsidiary
  • FirstBank mobile platform achieves the fastest growing mobile banking penetration across Africa, becoming the highest card transacting bank on the Interswitch payment platform[6]
  • FirstBank card issuance reaches 10 million cards, making FirstBank the first in the Nigerian Banking industry and the second in Africa to achieve this milestone6
  • FBN Merchant Bank acquires FBN Capital Asset Management and FBN Securities from FBN Capital Limited



Selected Financial Summary


Income statement  
(Nbillion) 9M




% Key Ratios % 9M




Gross earnings 439.2 417.4 5.2 Post-tax return on average equity[7] 10.1 9.4
Interest income 356.1 278.6 27.8 Post-tax return on average assets[8] 1.3 1.2
Net-interest income 254.3 202.9 25.3 Earnings yield[9] 12.3 10.2
Non-interest income[10] 74.0 131.0 – 43.5 Net-interest margin[11] 8.8 7.5
Operating Income[12] 328.1 333.9 -1.7 Cost of funds[13] 3.5 2.7
Impairment charge for credit losses 97.6 114.7 -14.9 Cost to income[14] 53.4 48.4
Operating expenses 175.3 161.8 8.4 Gross loans to deposits 77.7 75.1
Profit before tax 55.4 57.5 -3.5 Liquidity (FirstBank(Nigeria)) 47.4 54.3
Profit after tax 45.8 42.5 7.8 Capital adequacy (FirstBank (Nigeria))[15] 17.2 15.4
Basic EPS (kobo)[16] 1.64 1.56 5.2 Capital adequacy

(FBN Merchant Bank)11

23.1 28.9
Statement of Financial Position NPL/Gross Loans 20.1 24.9
(Nbillion) 9M




% NPL coverage[17] 57.6 43.6
Total assets 4,863.9 4,736.8 2.7 PPOP[18]/impairment charge (times) 1.6 1.5
Customer loans & advances (Net) 2,043.9 2,083.9 -1.9 Cost of risk[19] 5.6 6.9
Customer deposits 2,938.5 3,104.2 -5.3 Leverage (times)[20] 7.7 8.1
Non-performing loans 458.1 584.2 -21.6 BVPS[21] 17.6 17.4
Shareholders’ funds 631.1 582.6 8.3


Commenting on the results, UK Eke, MFR, the Group Managing Director said:

“FBNHoldings has again demonstrated its resilience in revenue generation with a 5.2% y-o-y growth in gross earnings to N439.2 billion following a y-o-y increase of 25.2% in net interest income to N254.3 billion. The Group is progressing in building the right structures for sustainable growth through an improved credit culture and risk management; increased technologically driven operational efficiencies; and the introduction of revenue enhancing platforms.

The Insurance group sustained its strong performance and we expect to see further growth from the retail, corporate and annuity businesses. Similarly, we continue to see strong growth trajectory in the Merchant Banking and Asset Management group. These businesses complement our commercial banking business in our aspiration to becoming the leading financial services institution in Middle Africa.

We remain confident that the initiatives being implemented across our subsidiaries will further strengthen our business and ultimately reposition the Group for sustainable growth”

Group Financial Review

 Income Statement

 Gross earnings grew by 5.2% y-o-y to N439.2 billion (Sept 2016: N417.3 billion), driven largely by a 27.8% y-o-y growth in interest income. This was partly offset by a 43.5%y-o-y decline in non-interest income. Interest income and non-interest income contributed 81.3% and 18.7% respectively. The growth in interest income to gross earnings was driven by increased investment in securities.

Net-interest income improved by 25.3% y-o-y to N254.3 billion (Sept 2016: N202.9 billion), driven by a 27.8% y-o-y increase in interest income to N356.1 billion (Sept 2016: N278.6 billion), and by improved yields on interest earning assets and continuous optimisation of the loan book. However, these achievements were partly offset by a 34.4% y-o-y increase in interest expense to N101.7 billion (Sept 2016: N75.7 billion) resulting from the high interest rate environment.

Cost of funds increased to 3.5% (Sept 2016: 2.7%), mainly on the back of the high interest rate environment and the impact of the MPR-indexed pricing on our savings deposits. Notwithstanding, the Group continued to optimise its balance sheet and achieved stronger blended yield on interest earning assets of 12.3% (Sept 2015: 10.2%). Consequently, net-interest margin increased to 8.8% from 7.5% in prior period.

Fees and commission (F&C) income, representing 73.3% (Sept 2016: 40.2%) of total non-interest income, increased by 3.0%y-o-y to N54.3 billion (Sept 2016: N52.7 billion). This improvement was driven primarily by: a 1.2% y-o-y increase in electronic banking fees to N15.7 billion (Sept 2016: N15.5 billion); 25.5% y-o-y growth in custodian fees to N4.3 billion (Sept 2016: N3.5 billion); 50.2% y-o-y growth in other fees and commission to N9.2 billion (Sept 2016: N6.1 billion); 45.2% y-o-y growth in credit related fees to N3.9 billion (Sept 2016: N2.7 billion); (Sept 2016: N2.7 billion); a 99.1% y-o-y rise in letter of credit commission and fees to N3.0 billion (Sept 2016: N1.5 billion); as well as a 5.5% y-o-y increase in fund transfer and intermediation fees to N3.2 billion (Sept 2016: N3.0 billion). The contribution of electronic banking fees to the total F&C income decreased slightly to 28.9% (Sept 2016: 29.4%) following the revision on bank charges from the CBN.

As a result of the FirstBank’s initiatives implemented to enhance revenue generation through alternative channels, FirstBank became the first financial institution in the Nigerian and West Africa sub-region to issue 10 million cards to customers. In addition, following the initiatives to diversify the digital bank offerings, the Bank won the awards for the “fastest mobile penetration bank across Africa”, “highest card transacting bank” and “highest issuer of Verve cards”.

Net insurance premium represents 10.9% of non-interest income (Sept 2016: 5.2%) and it is up 17.6% y-o-y to N8.1 billion (Sept 2016: N6.8 billion) as we remain focused on further driving revenues across the Group.

Operating expenses increased by 8.4% y-o-y to N175.3 billion (Sept 2016: N161.8 billion) but remain below the headline inflation rate of 15.9%. The increase is as a result of the general inflationary environment and the impact of currency devaluation which were partly offset by a decline in personnel expenses, as we continue our efforts to improve productivity, optimise cost and increase operational efficiency.

Cost-to-income ratio closed at 53.4% y-o-y (Sept 2016: 48.4%[22]). The progress made on our cost optimisation is impacted by the current operating environment. We expect further efficiency gains across the Group as we begin to extract the benefits of the ongoing implementation of the ERP/ERM and other technology enabled initiatives.

Net impairment charge on credit losses declined by 14.9% to N97.6 billion (Sept 2016: N114.7 billion) as we continue to progress on remediation and recoveries as well as asset quality strategies. Consequently, cost of risk decreased to 5.6% (Sept 2016: 6.9%), while the non-performing loans ratio declined to 20.1% (Sept 2016: 24.9%, Dec 2016:  24.4%, March 2017: 26.0% and June 2017: 22.0%). We are on track to meet our 2017 NPL ratio guidance, in line with our long-term strategic outlook.

Profit before tax decreased by 3.5% y-o-y to N55.4 billion (Sept 2016: N57.5 billion). Income tax expense was down to N9.6 billion (Sept 2016: N14.9 billion). Earnings per share[23] increased by 5.2% y-o-y to N1.64 (Sept 2016: N1.56).

Statement of Financial Position

 Total assets increased by 2.7% y-t-d to N4.9 trillion (Dec 2016: N4.7 trillion); this was largely driven by a 7.1% y-t-d increase in investment securities to N1.34 trillion (Dec 2016: N1.25 trillion); and a 41.9% y-t-d increase in loans to banks to N631.5 billion (Dec 2016: N444.9 billion). Earning assets have been further optimised with total interest earning assets growing by 5.7% y-t-d to N3.96 trillion from N3.74 trillion in December 2016, representing 81.3% of total assets (Dec 2016: 79.0%).

Total customer deposits declined by 5.3% y-t-d to N2.9 trillion (Dec 2016: N3.1 trillion) as we focused on growing inexpensive deposit at the right mix. The Group’s deposit base remains overall stable and strong with a growing retail franchise and about 13 million active customer accounts. The decline in domiciliary deposits y-t-d can be attributed primarily to the state related remittances made and reported during the half year results. Similarly, term deposits declined to N841.2 billion (Dec 2016: N842.3 billion). On the other hand, Savings deposits, representing a very stable funding base, has continued to increase to N974.1 billion, up 2.2% y-o-y (Dec 2016: N952.7 billion) reflecting the strength of the franchise and its well-diversified funding base.

 Total loans & advances to customers (net) declined by 1.9% y-t-d to N2.0 trillion (Dec 2016: N2.1 trillion) primarily following repayments and write-off of assets that had been fully impaired. This result speaks to the efforts being made to strengthen asset quality in a sustainable manner while cleaning up our legacy asset position. Sectors contributing to growth in the quarter are; manufacturing, agriculture and general[24].

Shareholders’ funds closed at N631.1 billion, up 8.3% y-t-d (Dec 2016: N582.6 billion), benefitting largely from an increase in: retained earnings (up 21.4% y-t-d to N196.2 billion (Dec 2016: N161.6 billion)); AFS (up 23.2% y-t-d to N33.9 billion (Dec 2016: N27.5 billion)); foreign currency translation reserves (up 13.3% y-t-d to N39.4 billion (Dec 2016: N34.8 billion)); as well as, SSI[25] reserve (up 41.4% y-t-d to N8.6 billion (Dec 2016: N6.1 billion)).

 Capital adequacy ratio for FirstBank (Nigeria) closed at 17.2% (Dec 2016: 17.8%) 220bps above the regulatory minimum of 15%, while the Capital adequacy ratio for FBN Merchant Bank closed at 23.1% (Dec 2016: 22.6%) above the 10% required by regulation for Merchant Banks.

Liquidity ratio for FirstBank (Nigeria) remains healthy at 47.4% (Dec 2016: 52.7%) above the 30% regulatory mark.

Business Groups

Commercial Banking

  • Gross earnings of N0 billion, up 4.5% y-o-y (Sept 2016: N381.0 billion)
  • Net interest income of N6 billion, up 22.4% y-o-y (Sept 2016: N197.4 billion)
  • Non-interest income of N6 billion, down 47.4% y-o-y (Sept 2016: N107.6 billion)[29]
  • Operating expenses of N4 billion, up 8.0% y-o-y (Sept 2016: N144.9 billion)
  • Profit before tax of N2 billion, down 2.7% y-o-y (Sept 2016: N45.4 billion)
  • Profit after tax of N3 billion, up 3.2% y-o-y (Sept 2016: N36.2 billion)
  • Total assets of N6 trillion, up 2.7% y-t-d (Dec 2016: N4.5 trillion)
  • Customers’ loans and advances (net) of N05 trillion, down 1.6% y-t-d (Dec 2016: N2.09 trillion)
  • Customers’ deposits of N8 trillion, down 6.1% y-t-d (Dec 2016: N3.0 trillion)

Commenting on the results Dr. Adesola Adeduntan, the MD/CEO of FirstBank and subsidiaries said:

“On the back of a stronger balance sheet and despite the challenging but improving economic environment, the commercial banking group delivered a 4.5% y-o-y growth in gross earnings – a testament to its resilient revenue generation capabilities.

 “To further support future revenue generation and in line with our strategic imperatives to reposition the commercial banking business, we are expanding our digital banking initiatives and transforming our business model to increase customer acquisition and retention, providing a renewed customer experience. To improve profitability in a sustainable way, the Group is increasingly optimising its cost base, leveraging on technology. In addition, good progress is being made in strengthening the credit processes end to end and improving the quality of the loan book while resolving the legacy assets.”

The Commercial Banking business contributed 90.4% (Sept 2016: 91.0%) to gross earnings of the Group and 78.8% (Sept 2016: 77.8%) to its profit before tax.

 Merchant Banking & Asset Management (MBAM)

Despite the reported 0.55% GDP growth in the economy as at the end of the second quarter, liquidity remained tight as the CBN continued to mop up excess liquidity to contain inflation. Similarly, interest rates remained high during the quarter. Notwithstanding the fragile economy, the merchant banking and asset management businesses recorded a 0.9% y-o-y growth in Total revenue to N28.0 billion (Sept 2016: N27.7 billion). This demonstrates the strength and diversified nature of the business portfolio. Profit before tax however closed at N9.1 billion (Sept 2016: N12.7 billion) as the FX revaluation gain from last year has been significantly reduced.

Revenue was driven by the Fixed Income, Asset Management, Trustees and Corporate banking businesses. Assets under Management (AuM) across the group (FBN Capital Asset Management, FBN Trustees and FBN Funds) increased by 11% y-o-y to close at N238 billion, as total assets declined 8.4% y-t-d to close at N178.8 billion (Dec 2016 N195.1 billion).

We expect an improvement in business activity for the rest of the year as investors’ confidence is restored in the FX markets and the Nigerian economy in general. The strategy remains to continue to accelerate growth in our chosen market segments, optimise collaboration by leveraging the right partnerships, and sustain service delivery by leveraging technology.

The Merchant Banking and Asset Management business contributed 6.3% (Sept 2016: 6.6%) to gross earnings of the Group and 16.1% (Sept 2016: 22.1%) to profit before tax.


The insurance business group continued to deliver superior performance driven by retail sales and business penetration. Profitability was further improved through cost optimisation and efficiency initiatives within the group.

Gross Premium Written increased by 60.4% to close at N17.2 billion (Sept 2016: N10.7 billion). Total revenue increased by 28.9% y-o-y to N12.5 billion (Sept 2016: N9.7 billion), while profit before tax rose to N3.5 billion, up 54.9% y-o-y (Sept 2016: N2.3 billion). The business group’s total assets increased by 41.0% y-t-d to N45.5 billion (Dec 2016: N32.3 billion).

Revenue growth sectors for the group include retail, corporate and annuity businesses. We remain committed to grow the business profitably through efficient risk management, strong technical capabilities and reinsurance facility optimisation, whilst focusing on excellent service delivery.

The insurance business contributed 2.8% (Sept 2016: 2.2%) to the Group’s gross earnings and 6.3% (Sept 2016: 3.5%) to its profit before tax.


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