FBN Holdings Plc, the parent company of First Bank of Nigeria Limited, is sending a message to its stakeholders through its impressive performance results for the Q3 and nine month periods ending September 30, 2022.
The behemoth financial services establishment, in the quantum leaps of the dancing elephant which its logo represents, conveys the two-prong message of strong top line and bottom line parameters, as well as a strong institution emerging from an entity once entangled in the web of corporate governance challenges. Both feats resonated in the group’s performance contained in its interim report for the period ended September 30, 2022.
The quick paced movement of the topline and bottomline holds a message of the company’s robust results that will occur at the end of the year to the delight of the stakeholders. “A look at these numbers gives a clue where the company is headed for the FY 2022 after years of dismay and corporate wrangling that almost put investors off,” said Mike Adeyemi, an investment expert.
Interest income for Q3 2022 grew remarkably by 45.4 percent to N144 billion from N99.1 billion in the corresponding period of Q3 2021, underlying the management’s aggressive approach towards lending and recoveries from huge non-performing loans that once caged the performance of the Tier-1 financial services institution. Year-to-date (or nine-month performance), FBN Holdings posted a 42.4 percent rise in interest income from N260.11 billion in Q3 2021 to N370.36 billion in the review period.
The bottom line responded significantly: Profit before tax soared to N39.76 billion from N7.90 billion, representing a 403.3 percent growth; while profit after tax rose to N34.68 billion from N2.76 billion or 1,156.6 percent jump.
We had noted in our analysis of the company’s HY results that the attendant effect of efficient operations which showed in well-managed costs streams, resulted in a quantum leap in both pre-tax and post-tax profits.
We also noted that the jump in interest income reflected the gains of bold steps in providing credit to the economy, especially the real sector, as the country struggles with frightening inflation and unemployment rates, currently at 20.6 percent and 33 percent respectively, according to data by the National Bureau of Statistics (NBS). Riding on the renewed management stream, the bank also achieved massive results in debt recovery efforts after it suffered the pangs of huge non-performing loans for a long time.
A Stockbroker, Sam Ndata, had told this newspaper that the impressive performance of FBN Holdings is the outcome of efficient management culture in a challenging environment. Ndata expressed strong optimism that the group had launched itself on the fast-lane trajectory which would resonate in a more robust returns in the days ahead.
“What you see are results of a well-managed bank. You can see the signs of efficiency and good corporate governance. I believe FBN Holdings will do better when the operating environment becomes less challenging,” said Ndata, Doyen of the Stockbrokers and Director at UIDC Securities Limited.
The bank’s superlative performance in Q3 and nine-month periods confirms the message that it would delight its stakeholders in a few months’ time when the 2022 FY result is published. There are reasonable grounds to tow this line of optimism.
Segregating the company’s five-year performance (2017 – 2021) revealed a strong performance trajectory that speaks the message of complete turnaround after its ‘lost’ frontline position in the financial services sector. FBN Holdings grew assets by 88.8 percent to N8.93 trillion from N4.73 trillion in 2017.
Profit before tax rose by 626.6 percent in five years from N22.94 billion in FY 2017 to N166.66 billion in FY 2021 yielding the window for strong performance in profit after tax which recorded a growth of 1,134.3 percent to N151.07 billion in FY 2021 from N12.24 billion in FY 2017. Gross earnings for five years showed a growth of 30 percent from N583.00 billion to N757.29 billion in FY 2021
“First Bank is strong, as I have always said. As a growing concern, it is bound to experience a moment of slowdown in response to the dictates of the economy. The nine month results are quite impressive considering the tough times the bank had gone through,” said Frank Ikekhide, a financial analyst.
Commenting on the results, the Group Managing Director, FBN Holdings, Mr. Nnamdi Okonkwo in a statement said, “FBNHoldings has again in Q3 2022 delivered a stellar performance, growing sustainable income from our core businesses. This is a testament to the success of our focus on carefully growing the business and driving profitability.
\“As a result, Gross earnings grew 26.6per cent y-o-y to N546.2 billion, while profit before tax doubled y-o-y to N105.5 billion. I am particularly delighted by the significant improvement in our credit risk portfolio.
“Specifically, the NPL ratio closed at 4.7per cent within the regulatory threshold of five per cent, while the coverage ratio increased to 75.1per cent from 62.2per cent in FY 2021.
“Furthermore, during the period under review, in attestation of the progress made by the Group, Fitch upgraded the credit ratings of FBNHoldings and FirstBank to ‘B’ with a Stable Outlook.
“Value creation remains our overarching objective as we continue to leverage the strengths of our unique brand and heritage to optimise our diverse business portfolio.
He added that, “We are confident of making further progress, with the capacity to generate sustainable performance that delivers superior returns to all our stakeholders.”
The banking subsidiary also showed impressive performance in period as Profit before tax moved to N96.4 billion in nine months of 2022, up 119.1 per cent y-o-y from N44 billion reported in nine months of 2021, while profit after tax closed nine months of 2022 at N85.7 billion, representing an increase of 142.1per cent from N35.4 billion reported in nine months of 2021.
According to the Chief Executive Officer of First Bank of Nigeria Limited (Commercial Banking Group), Dr Adesola Adeduntan, “The performance of the Commercial Banking Group for the nine months ended September 30, 2022, has again shown that the Group is making progress in the pursuit of its ‘Quantum Profitability Leap’ agenda. The improved profitability during the period under review further reinforces the Bank’s commitment to its growth aspirations despite the challenging market conditions.
“Our gross earnings are up 27.5per cent y-o-y to N512.9 billion, and net interest income up 55.7per cent y-o-y to N248.5 billion respectively.
“On the back of the impressive growth recorded in our top line, our profit before tax recorded another strong growth of 119.1per cent y-o-y to N96.4 billion, whilst profit after tax also grew impressively by 142.1per cent y-o-y to N85.7 billion as the Bank continues to reap the benefits of the changes to our business model in addition to revamping of our risk management and control architecture.”
He added, “We continue to record progress in driving down our non-performing loan ratio, which has now come down to 4.86 per cent at the end of the third quarter, within regulatory limit of five per cent. This is the first time since 2015 that we would be within the regulatory limit, and we achieved this ahead of our initial target of Q4 2022.
“In further testament to the ongoing turnaround and repositioning of the Parent and Banking Group, Fitch, following the conclusion of their review during the quarter, announced the upgrade of FBNHoldings and FirstBank’s Long-Term Issuer Default Ratings (IDRs) to ‘B’ from ‘B-‘, with Outlook Stable. This has aligned our credit rating to our Tier 1 peers and the sovereign and has further positioned the Group for more market opportunities.
“We remain confident that as we go into Q4 2022 and plan for the new year, we will continue to strengthen our franchise capabilities and offerings across all our markets, not only to withstand the current headwinds but also continue to deliver top-end value-adding products and services to our esteemed customers and other stakeholders.
FBN Holdings received top-rating during the third quarter of 2022. On September 16, Fitch Ratings announced the upgrade of FBN Holdings Plc’s (FBNH) and First Bank of Nigeria Ltd’s (FBN) Long-Term Issuer Default Ratings (IDRs) to ‘B’ from ‘B-‘, and according to the rating agency, the Outlooks are Stable. Fitch has also upgraded their Viability Ratings (VR) to ‘b’ from ‘b-‘.
It explained that the upgrade of the Long-Term IDRs follows that of the VRs, reflecting that corporate governance irregularities publicly raised by the Central Bank of Nigeria (CBN) in April 2021, including two longstanding related-party exposures, have largely been addressed and therefore risks to capitalisation have receded, helped by strong internal capital generation since the irregularities were raised.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
