May 29, 2024/FSDH Research

Key Performance Highlights:

• After delivering robust all-around performance in FY23, FBN Holdings maintained positive momentum and published solid 1Q24 results. The 1Q24 gross earnings surged 181.4% YoY to N730.3 billion compared to N259.5 billion in 1Q23, while the operating profit grew to N238.5 billion in 1Q24, a massive 325.2% YoY growth. In 1Q24, the gross earnings growth continued to be driven by a 153.3% YoY rise in interest income to N455.0 billion (62.3% of gross earnings), further boosted by the net gains from financial instruments at FVTPL of N288.9 billion. The continued strong rate environment drove interest income growth (earning yields grew to 14.2% from 10.1% in 1Q23), which resulted in the net interest margin improvement to 7.1% in 1Q24 from 6.3% in 1Q23. However, interest expense spiralled 234.1% YoY to N226.4 billion in 1Q24, owing to increased customer and bank deposits. Additionally, the impairment charges grew 153.9% YoY to N42.9 billion in 1Q24, and the net interest income after impairment grew 95.5% YoY to N185.7 billion in 1Q24 (1Q23: N94.6 billion).
   
• The Group’s net fee and commission income vaulted 52.8% YoY to N54.0 billion in 1Q24, led by credit-related fees (+196.5% YoY to N7.7 billion), funds transfer and intermediation fees (+146.6% YoY to N8.5 billion), and account maintenance fees (+117.2% YoY to N8.7 billion). Moreover, the Group reported a N288.9 billion gain from the fair value of financial assets reported at fair value through profit or loss (FVTPL) in 1Q24 compared to a N2.0 billion loss from financial instruments at FVTPL in 1Q23. However, the gain on the sale of investment securities declined 63.8% YoY to N12.0 billion in 1Q24, and the Group suffered a foreign exchange loss of N94.8 billion in 1Q24 compared to a foreign exchange income of N3.0 billion in 1Q23. The dividend income increased 180.0% YoY to N364 million in 1Q24, while the other operating income surged 94.8% YoY to N5.1 billion in 1Q24 due to higher recoveries and sundry income.
   
• In 1Q24, the personnel expenses grew 107.5% YoY to N64.9 billion, while the depreciation amortisation and impairment charges climbed 90.6% YoY to N13.6 billion. Furthermore, the Company’s operating expenses increased by 84.6% YoY to N134.2 billion in 1Q24, mainly due to higher regulatory costs, maintenance costs, and operational and other losses. Consequently, the operating profit soared 325.2% YoY to N238.5 billion in 1Q24 (1Q23: N56.1 billion). The Group’s loss from discontinued operations increased 56.3% YoY to N50 million versus N32 million in 1Q23. The effective tax rate for 1Q24 was slightly higher at 12.7% in 1Q24 vs. 10.7% in 1Q23. Consequently, the profit for the year increased by 315.8% YoY to N208.1 billion in 1Q24 (1Q23: N50.1 billion). Accordingly, FBN Holdings reported earnings per share of N5.76 versus N1.38 in 1Q23, a 319.0% YoY jump.
   
• Looking at segments, Commercial Banking and Business Group’s Profit from continuing operations vaulted 292.1% YoY to N188.5 billion in 1Q24 vs. N48.1 billion in 1Q23, along with a massive 882.2% YoY rise in Merchant Banking and Asset Management Business Group profit to N18.9 billion in 1Q24 (1Q23: N1.9 billion). The Other segment’s profit also surged 8.8x YoY to N773 million in 1Q24 compared to N88 million in 1Q23.

Market Reaction: The investor reaction to the solid 1Q24 performance was positive as FBN Holdings stock jumped 4.27% to close at N22.00, versus a 0.53% gain for the All-Share Index on 28/5.

FBN Holdings Earnings Highlights 1Q24

Source: Company Financials, FSDH