May 27, 2024/Cordros Report
FBN Holdings Plc (FBNH) published its Q1-24 unaudited financial report this morning, revealing stellar expansions across its core (+153.3% y/y) and non-core (+267.3% y/y) income lines. Consequently, the group’s EPS surged by +317.4% y/y to NGN5.76 in Q1-24.
The group recorded a marked 153.3% y/y growth in interest income to NGN454.98 billion, driven by higher interest earned on loans and advances to customers (+118.7% y/y) and investment securities (+199.4% y/y). We note that the gains on these contributory lines were due to a combination of elevated yields in the debt market and surge in the group’s interest-earning assets (+31.8% YTD to NGN12.07 trillion).
Similarly, interest expense grew to NGN226.42 billion (+234.1% y/y) owing to the higher interest paid on deposits from customers (+182.8% y/y) and financial institutions (+357.2% y/y). We highlight that the increase in the bank’s deposits (+26.8% YTD to NGN15.81 trillion) coupled with the deterioration of its CASA mix (Q1-24: 77.7% vs 2023FY: 81.2%) triggered the higher interests incurred in the review period. Notwithstanding, the group recorded an expansion in net interest income (+104.4% y/y). Furthermore, higher credit impairment charges (+153.9% y/y) in Q1-24 led to a moderation in net interest income ex-LLE (+95.5% y/y).
Also, non-interest income advanced by 267.3% y/y to NGN265.64 billion, underpinned by increased income from the group’s investment securities (+863.6% y/y) and net fees and commission income (+52.8% y/y) in the period. Consequently, operating income rose by 169.8% y/y to NGN451.31 billion.
Operating expenses grew by 91.4% y/y, triggered by increases in the group’s personnel and regulatory costs. Precisely, the group recorded increased expenses on personnel (+107.5% y/y), NDIC premium (+207.0% y/y), and AMCON levy (+26.2% y/y) in Q1-24. Nonetheless, the faster growth in operating income relative to expenses ensured significant improvement in operational efficiency, as the cost-to-income ratio (ex-LLE) settled at 47.1% (vs 66.5% in the prior year).
Finally, FBNH’s profit before tax grew by 325.1% y/y to NGN238.53 billion in Q1-24. After accounting for a higher tax charge (+404.5% y/y) in the period, PAT settled at NGN208.16 billion (+315.6% y/y).
The group will hold a conference call tomorrow, Tuesday (28 May), at 3:00 pm Lagos time to discuss the results. Kindly click here to register.
Comment: FBNH’s performance in the review period was in accordance with our expectations for the sector and in line with Tier-1 banking peers. For the rest of the year, we project the group will continue to benefit from the high yield environment and naira depreciation to record further growth in its funded and non-funded income lines. Our estimates are under review.
Cordros Research
