July 31, 2024/CSL Research
FBNH H1 2024 unaudited numbers showed strong growth in both Interest and Non-Interest Income. Interest Income was up 155.4% y/y and 8.3% q/q driven by growth in both earning assets and average yield. Net Loans to customers were up 42.4% at the close of H1 2024 relative to the December 2023 position (including the impact of devaluation on FCY denominated loans) while investment securities grew 43.3%. Earnings yield improved to 14.1% in H1 2024 compared with 9.1% in H1 2023 indicative of the high interest rate environment.
Interest Expense on the other hand, also grew significantly, up 219.0% y/y but declined 8.9% q/q (Q2 compared to Q1) resulting in an uptick in cost of funds to 5.2% for H1 2024 compared with 2.7% for H1 2023. Customer Deposits were up 41.9% in H1 2024 compared to the December 2024 position, also inclusive of the impact of devaluation on FCY deposits. Overall, Net Interest Income grew strongly, up 118.7% y/y and 25.3% q/q while Net-Interest Margin (NIM) settled at 7.7% compared with 5.8% for H1 2023.
Net Fee and Commission Income also grew strongly, up 54.0% y/y and 5.4% q/q. While all Fee and Commission Income lines showed y/y growth, major drivers were a growth in credit related fees (up 168.1% y/y), growth in letters of credit commissions and fees (up 41.48% y/y), strong growth in funds transfer & intermediation fees (up 77.7% y/y) and growth in account maintenance fees (up 87.1% y/y).
FBN Holdings H1 2024
Source: Company data, CSL Research. |
Other Income (Foreign Exchange Income, Net Gains on Investment Securities, Net Gains or Loss on Financial Instruments held at FVTPL, Dividend Income, Other Operating Income) increased by 77.8% y/y but declined 46.5% in Q2 compared to Q1. The group reported fair value gains on financial instruments at FVTPL of N423.9bn for H1 2024 compared with only N232.7bn for H1 2023 but the impact on profit was moderated by foreign exchange revaluation loss of N192.6bn reported in H1 2024 compared with a loss of N112.9bn in H1 2023. The Q/q decline was due to lower fair value gain of N143.4bn in Q2 relative to N288.8bn in Q1
Operating Expenses grew 95.0% y/y and 9.5% q/q. The stronger y/y growth in OPEX compared with the growth in Total Operating Income (+94.0% y/y) led to a slight deterioration in Cost to Income Ratio (CIR ex provisions) to 46.9% in H1 2024 compared with 46.6% in H1 2023.
H1 2024 impairment Charge grew significantly, up 64.0% y/y to N93.0bn bringing H1 2024 annualised Cost of Risk (COR) to 2.3% compared with 1.9% for H1 2023.
Pre-tax Profit grew strongly, up 100.9% y/y to N411.99bn while Net profit was up 95.2% y/y to N365.3bn, 2.6% bringing H1 2024 annualised ROAE to 36.9% compared with 31.5% for H1 2023.
We have a hold recommendation on the stock with a target price of N29.64/s. Current price: N20.95/s.
Kindly click on the below link to download the full report.
FBN Holdings H1 2024 Quick take.pdf
