FBNH sees NPLs dip 15% in H2, expects 9mobile debt resolved in 3Q

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FBN Holdings Plc, Nigeria’s second largest bank by assets says it expects its non-performing loans (NPL) ratio to decline to less than 15 percent by year-end from 20.8 percent as at the half year 2018 period, due to credit restructuring and recovery

The Lagos-based lender is looking to target manufacturing, trade and retail-distribution companies for loans this year, according to Urum Kalu Eke, the Chief Executive Officer and Group Managing Director at FBN Holdings who was speaking on a teleconference call yesterday with analysts and investors on the unaudited results for the six months 30 June 2018 period.

“Loan-growth target has been cut to 5%-7% from 7%-10%, after payments by borrowers and delays in approving new loans,” Eke said.
Meanwhile FBN is expected to make a 35 percent provision on its loan to 9mobile Nigeria and a 30 percent provision on credit to Atlantic Energy, according to its Chief Risk Officer Olusegun Alebiosu.

“The resolution of the 9mobile debt is expected in 3Q; while the Atlantic Energy resolution will happen this year,” said Alebiosu on the same conference call. FBN Holdings Plc., on Friday announced its unaudited results for the six months ended 30 June 2018, showing total assets of N5.3 trillion, up 1.3 percent year-to-date (y-t-d) (Dec 2017: N5.2 trillion), customer deposits of N3.3 trillion, up 4.1 percent y-t-d (Dec 2017: N3.1 trillion), Profit before tax of N38.9 billion, up 9.1 percent y-o-y (Jun 2017: N35.6 billion), and profit after tax of N33.5 billion, up 13.7 percent y-o-y (Jun 2017: N29.5 billion).

Commenting on the results, UK Eke, the Group Managing Director said: “FBN Holdings continues to make steady progress towards delivering on its strategic targets. This has been demonstrated with a 13.7% y-o-y increase in profit after tax, 21.4% y-o-y growth in non-interest and 15.4% y-o-y decline in impairment charge. Clearly, the Group is on its way to delivering its promises on asset quality, enhancing revenue generating capacity through non-interest income and driving further efficiencies.”

The Commercial Banking business contributed 90.2 percent (Jun 2017: 90.3%) to the Group’s gross earnings and 84.0 percent (Jun 2017: 78.3%) to the Group’s profit before tax. Commenting on the results Adesola Adeduntan, the MD/CEO of FirstBank and its Subsidiaries said:
“The Commercial Banking Group reported a relatively strong set of results and I am pleased to report consistent improvement towards our strategic objectives. This is reflected in a strong 28.5% y-o-y increase in non-interest income, 15.5% y-o-y reduction in the impairment charge and a marginal increase of 0.9% y-o-y in operating expenses, despite the high inflationary environment. It is clear that our efforts to enhance our revenue generating capabilities, strengthen the risk management and control environment as well as to optimise efficiencies within our business are paying off.”

“We remain focused on maximizing the potential of our business, innovating to expand access to new markets and increasing the contribution of our international subsidiaries, using technology as a key enabler. We expect further improvements in the coming periods, from growth in the quality and yields of the loan book to enhanced remediation efforts, service delivery excellence and the risk and control environment. I am confident in the capacity of our business to deliver the expected results.”

The Merchant Banking and Asset Management business contributed 6.3 percent (Jun 2017: 6.6%) to the Group’s gross earnings and 11.1% (Jun 2017: 17.5%) to the Group’s profit before tax. The insurance business contributed 3.2 percent (Jun 2017: 2.8%) to gross earnings of the Group and 7.4 percent (Jun 2017: 6.5%) to profit before tax.

by PATRICK ATUANYA

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