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May 27, 2022/FSDH Report

Key Performance Highlights:

• FBN Holdings filed its 1Q22 results on 27 May with a solid 32.2% YoY jump in gross earnings to N180.6 billion compared to N136.6 billion in the prior-year quarter. However, the bank reported a 45.3% decline in gross earnings on a QoQ basis. It’s worth noting that the results in 4Q21 were boosted by a one-off recovery on the Atlantic Energy Ltd loan, which was previously written off. The bank’s interest income grew by 39.7% YoY to N109.4 billion in 1Q22 from N78.3 billion in 1Q21, partially offset by a 43.4% YoY rise in interest expense to N36.7 billion. The interest expenses primarily rose due to a 72.7% YoY jump in customer deposits, leading to a 24.4% YoY increase in interest income from loans and advances to customers. The impairment charges declined 33.6% YoY to N8.8 billion in 1Q22. As a result, the Net Interest Income after Impairment expanded by 61.7% YoY to N64.0 billion from N39.6 billion in 1Q21.
   
• Net fee and commission income declined 3.9% YoY to N27.3 billion, mainly due to a 0.9% YoY fall in Fee and commission income, further exacerbated by a 14.1% YoY rise in Fee and Commission expense due to increased ATM and SMS alert related expenses. The fee and commission income declined due to lower Electronic banking fees (down 15.4% YoY) in 1Q22. The bank’s foreign exchange income soared 114.3% to N5.7 billion. The net gains on the sale of investment securities were N14.6 billion, versus N17.9 billion in 1Q21. The gains from the fair value of financial assets reported at fair value through profit or loss (FVTPL) ballooned 5.51x YoY to N14.8 billion, versus N3.1 billion in 1Q21, primarily driven by fair value gains of N15.9 billion. The dividend income increased to N84 million in 1Q22 from N26 million in 1Q21. Other operating income spurted 335.7% YoY to N2.2 billion in 1Q22 versus an income of N501 million in 1Q21 due to higher sundry income.
   
• The bank’s personnel cost grew a steady 3.3% YoY to N25.6 billion in 1Q22, and the depreciation charges rose 11.4% YoY to N7.2 billion in 1Q22. Moreover, the company’s operating expenses soared 41.2% YoY to N59.3 billion, driven by an 89.6% YoY jump in regulatory cost to N29.1 billion in 1Q22. Resultantly, the operating profit jumped 93.5% YoY to N36.6 billion in 1Q22. The effective tax rate declined to 11.2% in 1Q22, compared to 17.4% YoY in 1Q21. During the quarter, the company reported a loss from discontinued operations of N41 million versus an N21 million loss in 1Q21. Consequently, the profit for the year shot up 107.7% YoY to N32.4 billion in 1Q22. Accordingly, the bank reported earnings per share of N0.89, a 105.8% rise compared to N0.43 in the prior-year quarter.
   
• In segmental break-up, Commercial Banking and Business Group’s revenue vaulted 32.3% YoY to N169.4 billion in 1Q22, coupled with a 30.3% YoY jump in Merchant Banking and Asset Management Business Group revenue to N10.5 billion in 1Q22. Other revenue also soared 30.4% YoY to N596 million in 1Q22.
   
• During the quarter, FirstBank appointed Mr. Olusegun Alebiosu as Executive Director, Risk Management & Executive Compliance Officer, Mr. Oluwatosin Adewuyi as Executive Director, Corporate Banking and Mr. Ini Ebong – Executive Director, Treasury and International Banking.

Market Reaction: The investor reaction to the strong quarterly performance was overwhelmingly positive as FBN holdings stock closed 6.98% higher versus a 1.76% gain for the All-Share Index (5/27).

FBN Holdings Earnings Highlights 1Q22

Source: Company Financials, FSDH