May 10, 2021/Cowry Asset Report

In FY 2020, FBN Holdings Plc’s (“FBNH” or “the Bank”) profitability in FY 2020 was essentially boosted by its non-core businesses; that is, fee and commission income and gain on sale of investment securities. Net fee and commission income grew year-on-year (y-o-y) by 13.12% to N93.78 billion even as net gains on sale of investment securities spiked y-o-y by 174.84% to N48.08 billion in FY 2020. However, First Bank Holdings recorded a lower top line as interest income from loans & advances and proceeds from assets held to maturity both fell in the review period.

We expect FBNH performance to be flattish in 2021 as interest income comes in lower. Although the recent corporate governance issues may cause conservatism, the tier-1 bank would need to increase lending in order to meet up with the LDR requirement of 65% and free up sterilized cash with CBN (CRR), while also keeping an eye on NPLs.

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