FBN Holdings posts N91.3bn profit as loan to customers hits N3.6trn in Q3



Uba Group

FBN Holdings Plc recorded a growth in profit after tax during its nine months financial year ended September 30, 2022.

The financial institution also increased lending to its customers in the review period as loans and advances jumped by 24.9 percent year to date to N3.6 trillion.

Profit after tax printed higher at N91.29 billion while profit before tax advanced by 99.3 percent y/y to N105.49 billion. Income tax expenses also increased by 17.6 percent.

Interest income grew by 42.4 percent y/y to N370.36 billion as all contributory lines save for the income from loans and advances to banks (-19.9 percent y/y to N19.21 billion) recorded higher revenue. Specifically, income from loans and advances to customers grew by 47.0 percent y/y, supported by the HoldCo’s risk asset creation during the period.

Likewise, income from investment securities increased by 54.9 percent y/y to N80.45 billion, despite the decline in the bank’s investment securities (-4.6% YTD to N2.89 trillion). We attribute the increase in the income from investment securities to the attractive yields in the fixed-income market.

Similarly, interest expense grew by 24.4 percent y/y to N120.83 billion due to the HoldCo incurring higher costs on its deposit (cost of fund increased by 20bps to 2.1 percent vs 9M-21: 1.9 percent).

Precisely, expenses on deposits from customers and financial institutions increased by 42.1 percent y/y and 6.5 percent y/y to N77.27 billion and N25.39 billion, respectively. It is noted that higher cost incurred on customers’ deposits is due to the deteriorating funding mix – CASA 9M-22: 80.7 percent vs FY-21: 82.8 percent. Eventually, the net interest income (ex-LLE) settled higher at N212.82 billion.

The HoldCo’s non-interest income (NII) increased marginally by 1.8 percent y/y to N156.99 billion, aided by the gains from other income (+32.1 percent y/y to N15.03 billion) and fees and commission (+5.9 percent y/y to N91.00 billion).

However, on the flip side, the lower income generated from FX (-63.9 percent y/y to N2.14 billion) and investment securities (-4.4 percent y/y N48.83 billion) trading slowed the growth in NII. Consequently, the operating income grew by 31.0 percent y/y to N369.82 billion.

Further down, operating expenses advanced by 15.2 percent y/y to N264.32 billion, driven by the increase in regulatory costs – deposit insurance premium (+336.9ppts y/y to N10.34 billion), AMCON levy (+29.2 percent y/y to N59.30 billion) and personnel expenses (+7.0% y/y to N84.91 billion).

Given the faster increase in operating income relative to OPEX, the cost-to-income ratio (ex-LLE) settled lower at 71.5 percent (9M-21: 81.3 percent).

FBNH recorded an expansion in its gross earnings to the tune of 26.7 percent y/y while earnings per share increased to N2.51, representing 124.1 percent y/y increase compared with N1.12 recorded in the same period of 2021.