FSDH Initial Reaction: FBN Holdings FY22 results 
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June 5, 2023/FSDH

Key Performance Highlights:

• FBN Holdings reported a mixed performance in FY22 as the gross revenue grew 6.3% YoY to N804.9 billion compared to N757.5 billion in the prior year, while profit before tax decreased by 5.3% YoY to N157.9 billion in FY22 compared to N166.9 billion in FY21. Moreover, the bank reported a 20.7% YoY decline in gross earnings in 4Q22. The bank’s interest income grew by 49.6% YoY to N551.9 billion in FY22 from N369.0 billion in FY22, mainly due to higher income from loans and advances to customers. On the other hand, interest expense rose 34.0% YoY to N188.6 billion in FY22, driven by increased customer deposits. Moreover, as the impairment charges were down 25.2% YoY to N68.6 billion in FY22, the net interest income after impairment expanded 115.8% YoY to N294.6 billion in FY22.
   
• Net fee and commission income was up slightly by 1.1% YoY to N117.9 billion, mainly due to a 2.4% YoY increase in fee and commission income to N143.9 billion, offset by an 8.7% YoY increase in fee and commission expense to N26.0 billion due to increased internet/web expenses and agent banking expenses. In FY22, the bank incurred a foreign exchange income of N22.4 billion compared to a foreign exchange income of N7.0 billion in FY21 powered by foreign exchange trading gain. However, a gain on the sale of investment securities decreased 28.3% YoY to N22.4 billion in FY22 versus a gain of N31.2 billion 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 N38.6 billion, down 28.0% YoY, due to a loss on the fair value of debt securities. Additionally, the dividend income plummeted 51.4% YoY to N3.1 billion in FY22, and the company’s other operating income fell 85.0% YoY to N22.4 billion in FY22, compared to other operating income of N149.4 billion in FY21, which included a recovery by the bank on the Atlantic Energy Ltd loan, which was previously written off.
   
• The bank’s personnel cost decreased 8.8% YoY to N117.3 billion due to lower wages and salaries, while the depreciation charges were up by 4.8% to N20.9 billion in FY22. Moreover, the company’s operating expenses increased by 23.3% YoY to N218.4 billion, driven by insurance premium and maintenance costs in FY22. The operating profit declined by 5.5% YoY to N157.7 billion in FY22. During the year, the company reported a loss from discontinued operations of N138 million, up 102.9% YoY versus an N68 million loss in FY21. The effective tax rate for the year increased to 13.7% in FY22, compared to 9.3% in FY21. Consequently, the profit for the year fell 9.9% to N136.2 billion in FY22. Accordingly, the bank reported earnings per share of N3.74 versus N4.17 in FY21.
   
• In segmental break-up, Commercial Banking and Business Group’s revenue increased 4.7% YoY to N746.9 billion in FY22 compared to N713.6 billion in FY21, along with a 24.7% YoY jump in Merchant Banking and Asset Management Business Group revenue to N52.9 billion in FY22. Other revenue also soared 303.7% YoY to N5.3 billion in FY22 compared to N1.3 billion in FY21.
   
• The bank proposed a final dividend of 50 kobos per share for FY22, an increase from 35 kobos per share in FY21, subject to appropriate withholding tax and approval by shareholders.

Market Reaction: The investor reaction to the FY22 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 FY22

Source: Company Financials, FSDH