Behemoth FBN Holdings dazzled industry watchers with an all-time high half-year pre-tax profit of N187.2 billion for the period ended June 30, 2023, translating to a 414 percent increase compared to N56.6 billion posted in the corresponding period of 2022.
The result was the highest that the Nigeria’s oldest financial services institution has recorded since it was listed as a Holco on the Nigerian Exchange (NGX) in November 2012/
According to its interim result filed with the NGX Limited on Thursday, July 20, 2023, the group recorded the profit boom on the innovative adoption of its financial instruments. This is unlike the majority of its peers who focus more on interest rate instruments to grow their top and bottom lines.
Interest income accounted for more than 58 percent of revenue, but gains from financial instruments significantly impacted profitability, given that bulk of the latter was eroded by galloping costs
Gains from financial instruments at fair value through profit and loss climbed twenty times over to N229.7 billion, helping to soften the blow of foreign exchange losses.
Interest income accelerated 69.3 per cent to N383.3 billion, riding on the whirlwind of interest rate hikes in corporate Nigeria, which has helped other lenders post record profits.
Disaggregated on a quarterly basis, the institution’s second-quarter results (April-June) shows that pre-tax profits rose 5 folds to N150.1 billion as against N29.2 billion in Q2 2022.
The increase in second-quarter profits helped its half-year profit before tax to rise by 213% to N206.2 billion compared to N65.7 billion same period last year.
Adesola Adeduntan, CEO of the group’s flagship division First Bank, described the feat as “the strongest financial performance in the almost 130 years of the Bank’s history,” in a separate document.
FBN Holdings, which runs seven subsidiaries spanning investment banking, trusteeship, insurance brokerage, merchant banking and asset management, among others, relies on its commercial banking unit FirstBank for roughly 93 per cent of its revenue.
The group operates in 825 business locations in ten markets within and outside Africa.
FBN Holdings put aside N57.6 billion to cover a potential loss from credit whose chances of repayment have been weakened by perennial defaults, 165.4 per cent higher than the figure for last year.
A significant pressure point was operating expenses which rose to N151.7 billion from N116.8 billion due to surges in reglatory costs and promotional expenses.
Non-performing loans as a percentage of gross loans slid to 4.3 per cent from 5.4 per cent a year ago, while total assets jumped by more than a third to N14.2 trillion.
“We continue to focus on customer-centric innovations with strong transactional and digital capabilities supported by sound risk management practices to anticipate and creatively deliver products and services that delight the different customer segments that we serve,” Group CEO Nnamdi Okonkwo said in the earnings report document.
FBN Holdings has returned 65.6 per cent this year and closed with a price-to-earnings ratio of 4.3x on Thursday before the earnings report was released.
The group’s impressive results for its half year 2023 operations reflect a growth trajectory that will excite the shareholders. This is coming after a period of heavy-footed performance on huge non-performing loans that plagued the financial services institution for some years past. The Group’s HY 2023 performance is reflective of its resilience and underpins the strategy to generate sustainable value for its stakeholders.
