FSDH Initial Reaction: FBNH 3Q22 results 
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November 4, 2022/FSDH Research

Key Performance Highlights:

• FBN Holdings filed its 3Q22 results on 27 October with an impressive 35.2% YoY jump in gross earnings to N187.9 billion compared to N139.0 billion in the prior-year quarter. Moreover, the bank reported a 6.7% spurt in gross earnings on a QoQ basis. The bank’s interest income grew by 45.3% YoY to N144.0 billion in 3Q22 from N99.1 billion in 3Q21, partially offset by an 18.6% YoY rise in interest expense to N47.4 billion. The interest income primarily rose due to higher income from loans and advances to customers, supported by a rise in interest income from investment securities. Although the impairment charges grew 84.6% YoY to N15.0 billion in 3Q22, the net interest income after impairment expanded 60.0% YoY to N81.6 billion in 3Q22.
   
• Net fee and commission income vaulted 14.4% YoY to N32.6 billion, mainly due to a 15.7% YoY increase in fee and commission income to N40.1 billion, partially offset by a 22.0% YoY increase in fee and commission expense to N7.5 billion. In 3Q22, the bank incurred a foreign exchange loss of N14.4 billion compared to a foreign exchange income of N5.4 billion in 3Q21. The company recorded a massive gain on the sale of investment securities of N4.5 billion versus a gain of N52 million a year ago. FBN Holdings recorded a gain from the fair value of financial assets reported at fair value through profit or loss (FVTPL) of N10.6 billion, up 47.7% YoY versus a gain of N7.2 billion in 3Q21. However, the dividend income plummeted 93.2% YoY to N111 million in 3Q22. In comparison, the company reported other operating income of N2.9 billion in 3Q22, compared to other operating loss of N9.1 billion in the prior period due to a rise in sundry income and gains on the sale of property and equipment.
   
• The bank’s personnel cost increased 5.4% YoY to N29.6 billion, while the depreciation charges edged 8.6% lower to N6.6 billion in 3Q22. Moreover, the company’s operating expenses marginally increased by 1.4% YoY to N42.1 billion, driven by higher regulatory and maintenance costs in 3Q22. In 3Q22, the operating profit soared 402.0% YoY to N39.7 billion. During the quarter, the company reported a loss from discontinued operations of N21 million versus an N16 million loss in 3Q21. The effective tax rate for the quarter declined significantly to 12.8% in 3Q22, compared to 64.1% YoY in 3Q21. Consequently, the profit for the year spiraled upwards 12.6x to N34.7 billion in 3Q22. Accordingly, the bank reported earnings per share of N0.96 versus N0.07 in the prior-year quarter.
   
• In segmental break-up, Commercial Banking and Business Group’s revenue vaulted 27.3% YoY to N509.4 billion in 9M22 compared to N400.2 billion in 9M21, coupled with a 14.0% YoY jump in Merchant Banking and Asset Management Business Group revenue to N35.7 billion in 9M22. Other revenue also soared 197.1% YoY to N2.1 billion in 9M22.
   
• On 16 August 2022, FirstBank appointed Mr. Samson Oyewale Ariyibi as an Executive director, Investment Management and Oversight of FBN Holdings Plc, while Mr. Patrick Iyamabo was appointed as an Executive Director, Chief Financial Officer (CFO) of the flagship subsidiary, First Bank of Nigeria Limited.
   
• On 21 September 2022, FBN Holdings Plc announced the completion of the acquisition of 100% of the share capital of the Access Pension Fund Custodian Limited from Access Bank Plc by First Pension Custodian Nigeria Limited, a subsidiary of First Bank Nigeria Limited.

Market Reaction: The investor reaction to the strong 3Q22 performance was extremely positive as FBN Holdings stock closed 7.69% higher at N9.80, versus a 1.60% loss for the All-Share Index on 28/10. Moreover, the stock further increased by 0.51% to N9.85 on 31/10 versus a 0.17% loss for the All-Share Index.

FBN Holdings Earnings Highlights 3Q22

Source: Company Financials, FSDH