Despite Limping Earnings, FBN Holdings 2017 Profit Up 226.88%, Offers N0.25 Dividend

Directors of FBN Holdings Plc, on Wednesday presented its audited result for the full year ended December 31, 2017, indicating significant improvement in the management of the operating entity- First Bank of Nigeria Limited.
This can be inferred by the fact that while gross earnings was flat at 2.34% up, net profit soared by 226.88%, helped by the N75.613bn or 33.45% drop in impairment charge for credit loss from N226.037bn to N150.424bn, as ratio of Non-Performing Loans to total stood at 22.8%, up from 52.7%.

The impairment charge related to its banking subsidiary- First Bank of Nigeria), whose commercial banking segment reported N148.579bn. Net profit therefore translated to Earnings Per Share of N1.21, up from just 39 kobo in the preceding full year. The directors have offered a 25 kobo dividend per share, with register of shareholders closing between May 7 and 13; while payment is slated for May 16 to those whose names appear on the register of members as at May 4. Payment shall be subject to approval by the shareholders at the annual general meeting on Tuesday, May 15, in Lagos.

Nonetheless, the result showed that there is still significant room to explore the group’s huge assets, judging by the fact that Net Profit Margin stood at 6.72%, as against 2.1%; which translates to the fact that management could only convert 6.72 kobo of every Naira earned into profit, far lower than its peers.

Specifically, gross earnings for the period rose from N581.83bn to N595.44bn, the bulk of which was the N469.586bn interest income, which increased from N405.281bn, while interest expense rose from N138.064bn from N100.839bn; resulting in net interest income of N331.522bn, as against the previous N304.442bn.

A further breakdown revealed that commercial bank fetched N536.554bn of total revenue, with interest income of N436.392bn; followed by the N38.857bn and N25.26bn from merchant banking and asset management; while insurance yielded N18.168bn and N6.09bn respectively.
Net interest income after impairment charge for credit losses therefore stood at N181.098bn, as against the previous N78.405bn, a 130.97% growth.
Insurance premium revenue increased to N12.973bn from N9.606bn; insurance premium revenue ceded to reinsurers climbed by 133l1% to N2.739bn from N1.175bn; leaving net insurance premium revenue at N10.234bn from N8.431bn.

Fee and commission income stood at N74.453bn from N71.36bn; fee and commission expense rose marginally from N11.073bn to N12.117bn; net gains on foreign exchange fell sharply from N89.077bn to N21.062bn. Net gains on investment securities dropped from N3.93bn to N2.61bn; net gains from financial instruments at fair value through profit soared to N11.117bn from a N6m loss

Dividend income improved to N2.053bn from N897m; other operating income rose to N3.901bn from N2.868bn; insurance claims jumped from N2.19bn to N4.041bn; while personnel expenses grew to N85.678bn from N83.805bn.
Operating expenses climbed from N120.03bn to N132.496bn; bringing total cost of sales dropped slightly to N538.64bn from N558.93bn; translating to operating profit for the year of N56.395bn, up from N22.948bn.

Profit before tax of FBN Holdings for the period stood at N56.825bn from just N22.948bn, representing a 147.63% growth, while income tax at N9.05bn, up from N5.807bn left after tax profit at N40.011bn, an improved from N12.243bn in the 2016.
Unrealised net gains arising during the year stood at N50.899bn, as against a N17.8bn loss; even as exchange difference on translation of foreign operations dropped to N13.362bn, from N26.724bn. Other comprehensive income for the year stood at N64.156bn from a loss of N3.099bn in prior year; resulting in total comprehensive income for the year of N104.167bn from just N9.144bn in 2016.

Also, total assets recorded 10.55% improvement at N5.236tr from N4.736tr, with customer loans and advances falling slightly to N2.001tr, up from N2.083tr in 2016. Of the customer loans, overdrafts rose slightly from N282.687bn to N296.135bn; while term loans remained flat at N1.67tr from N1.687tr in 2016.
Total liabilities rose at a slightly lower pace to N4.558tr, up from N4.154tr, of which customer deposits remained the biggest, rising marginally from N3.104tr to N3.143tr; resulting in shareholders’ fund of N678.19bn, up by 16.41% from N582.58bn.

Commenting on the results, Urum Kalu Eke, Group Managing Director of FBN Holdings said the performance, coming ahead of projections, is the outcome of initiatives put in place, especially cost containment as shown by the 7.7% operating expense growth, down from 15.4%.
More significant improvement, he inferred, could come from accelerated resolution of the group’s “legacy assets to demonstrate sustainable improvement in asset quality as the progress we made during the year was moderated by developments in Q4 which kept our performance below guidance.

“This was largely as a result of the impairment of 9mobile, which was across the industry, as well as the foreign currency translation impact on our existing portfolio. These are one-off events and we assure that appreciable progress would be made on NPL in 2018 in line with our three-years strategic plan.

https://investdata.com.ng/2018/04/despite-limping-earnings-fbn-holdings-2017-profit-226-88-offers-n0-25-dividend/