FSDH Initial Reaction: FBN Holdings 1Q23 results 
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June 5, 2023/FSDH

Key Performance Highlights:

• On June 2, FBN Holdings reported a solid set of numbers for 1Q23 as the gross revenue soared 43.7% YoY to N259.5 billion compared to N180.6 billion in 1Q22, while profit before tax jumped 53.6% YoY to N56.1 billion in 1Q23 compared to N36.5 billion in 1Q22. Moreover, the bank reported a marginal 0.7% QoQ rise in gross earnings in 1Q23. The bank’s interest income rose 64.1% YoY to N179.6 billion in 1Q23, mainly due to higher income from loans and advances to customers and investment securities. Interest expense surged 84.9% YoY to N67.8 billion in 1Q23, driven by increased deposits from customers. As the impairment charges shot up 93.1% YoY to N16.9 billion in 1Q23, the net interest income after impairment vaulted 48.3% YoY to N95.0 billion in 1Q23.
   
• Net fee and commission income was up by 29.2% YoY to N35.3 billion in 1Q23, mainly due to a 27.2% YoY increase in fee and commission income to N42.8 billion owing to higher electronic banking fees, offset by an 18.5% YoY increase in fee and commission expense to N7.5 billion. In 1Q23, the bank incurred a foreign exchange income of N3.0 billion compared to a foreign exchange income of N5.7 billion in 1Q22. However, a gain on the sale of investment securities increased by a staggering 128.1% YoY to N33.2 billion in 1Q23. FBN Holdings recorded a loss from the fair value of financial assets reported at fair value through profit or loss (FVTPL) of N2.0 billion compared to the profit of N14.8 billion in the prior period. Additionally, the dividend income was up 54.8% YoY to N130 million in 1Q23, and the company’s other operating income increased 21.1% YoY to N2.6 billion in 1Q23 due to higher recoveries.
   
• The bank’s personnel cost increased 22.2% YoY to N31.3 billion, while the depreciation, amortization and impairment charges were down slightly by 1.4% to N7.1 billion in 1Q23. Moreover, the company’s operating expenses increased by 22.6% YoY to N72.7 billion, driven by advertisement and corporate promotions and insurance premium in 1Q23. The operating profit vaulted by 53.3% YoY to N56.1 billion in 1Q23. During the quarter, the company reported a loss from discontinued operations of N32 million, down 22.0% YoY versus an N41 million loss in 1Q22. The effective tax rate for the year decreased slightly to 10.7% in 1Q23, compared to 11.2% in 1Q22. Consequently, the profit for the year rose 54.5% to N50.1 billion in 1Q23. Accordingly, the bank reported earnings per share of N1.38 versus N0.89 in 1Q22.
   
• On a segmental basis, Commercial Banking and Business Group’s revenue increased 44.9% YoY to N245.5 billion in 1Q23 compared to N169.3 billion in 1Q22, along with a 24.6% YoY jump in Merchant Banking and Asset Management Business Group revenue to N13.1 billion in 1Q23. Other revenue also soared 53.8% YoY to N918 million in 1Q23 compared to N597 million in 1Q22.

Market Reaction: The investor reaction to the 1Q23 performance was positive as FBN Holdings stock closed 1.79% higher at N14.25, versus a marginal 0.02% gain for the All-Share Index on 2/6.

FBN Holdings Earnings Highlights 1Q23

Source: Company Financials, FSDH