FBN Holdings Plc 9M 2024: Decent 9M Performance

Image Credit: FBNH

October 30, 2024/CSL Research

FBNH 9M 2024 unaudited numbers showed strong growth in both Interest and Non-Interest Income. Interest Income was up 164.6% y/y and 36.6% q/q driven by growth in both earning assets and average yield. Net Loans to customers were up 47.3% at the close of 9M 2024 relative to the December 2023 position (including the impact of devaluation on FCY denominated loans) while investment securities grew 138.9%. Earnings yield improved to 14.7% in 9M 2024 compared with 10.2% in 9M 2023 indicative of the high-interest rate environment.

Interest Expense on the other hand, also grew significantly, up 214.3% y/y and 52.9% q/q (Q3 compared to Q2) resulting in an uptick in cost of funds. Customer Deposits were up 56.84% in 9M 2024 compared to the December 2024 position, also inclusive of the impact of devaluation on FCY deposits. Overall, Net Interest Income grew strongly, up 132.7% y/y and 24.6% q/q while Net-Interest Margin (NIM) settled at 7.9% compared with 6.2% for 9M 2023.

Net Fee and Commission Income also grew strongly, up 48.9% y/y and 3.5% q/q. While all Fee and Commission Income lines showed y/y growth, major drivers were a growth in credit related fees (up 122.0% y/y), strong growth in funds transfer & intermediation fees (up 103.7% y/y) and growth in account maintenance fees (up 81.6% y/y).

FBN Holdings 9M 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 101.3% y/y but declined 24.5% in Q3 compared to Q2. The group reported fair value gains on financial instruments at FVTPL of N538.2bn for 9M 2024 compared with only N249.5bn in 9M 2023 but the impact on profit was moderated by foreign exchange revaluation loss of N264.4bn reported in 9M 2024 compared with a loss of N118.3bn in 9M 2023. The Q/q decline was partly due to lower fair value gain of N135.9bn in Q3 compared to N114.4bn in Q2.

Operating Expenses grew 94.8% y/y but declined 1.6% q/q. The slightly lower y/y growth in OPEX compared with the growth in Total Operating Income (+109.6% y/y) led to a slight improvement in Cost to Income Ratio (CIR ex provisions) to 46.4% in 9M 2024 compared with 49.9% in 9M 2023.

9M 2024 impairment Charge grew significantly, up 111.5% y/y to N171.4bn bringing 9M 2024 annualised Cost of Risk (COR) to 2.78% compared with 2.0% for 9M 2023.

Pre-tax Profit grew strongly, up 128.0% y/y to N610.9bn while Net profit was up 125.8% y/y to N533.9bn, bringing 9M 2024 annualised ROAE to 32.8% compared with 26.6% for 9M 2023.

We have a hold recommendation on the stock with a target price of N29.64/s. Current price: N26.50/s. Our estimates are being reviewed.

FBN Holdings will host a question-and-answer teleconference call with analysts and investors on the unaudited Nine months September 30, 2024 results on Tuesday, November 5, 2024, at 3:00pm Lagos / 2:00pm UK / 10:00am New York / 4:00pm Johannesburg & Cape Town.

Kindly click on the below link to download the full report.

FBN Holdings 9M 2024 Quick take.pdf

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