FBN Holdings Plc posts 231.07% growth in Profit for half year 2023

FBN Holdings Plc (NGX: FBNH) has reported a profit of N187.17bn for the first half (H1) of 2023 ended 30 June 2023, a 231.07% growth on the N56,53bn it reported for the same period in 2022.

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A review of the financial services holding company’s income statement shows that while it enjoyed growth in all its revenue segments, the biggest contributor to its income and subsequent profit was its Net gains from financial instruments at FVTPL.

FBN Holdings Plc reported Net gains of N11.27bn from financial instruments at FVTPL in H1 2022 and N229.74bn in H1 2023. Further review shows that while it incurred trading loses of N1.43bn on debt securities in H1 2022, it lost N4.64bn in H1 2023. However it reported a fair value gain of N234.39bn in H1 2023, against N12.70bn in 2022.

All the gains came in the second quarter of the year, where it reported net gains of N235.97bn and trading loses of N4.17bn. In the first quarter of the year, it posted a net loss of N2.04bn from financial instruments at FVTPL.

A review of the balance sheet shows that FBNH has financial assets at fair value of N681.37bn (Dec. 2022: N278.46bn); N582.35bn on derivative assets, N51.79bn on debt securities (N26.64bn on Treasury bills with maturity over 90 days, N22.70bn on Bonds, and N2.44bn on Treasury bills with maturity of less than 90 days), N33.63bn on unlisted equity securities and N13.58bn on listed equity securities.

What is a derivative: A derivative is a complex type of financial security that is set between two or more parties. The term derivative refers to a type of financial contract whose value is dependent on an underlying asset, group of assets, or benchmark. The most common underlying assets for derivatives are stocks, bonds, commodities, currencies, interest rates, and market indexes.

A glimpse into the company’s 2022 annual financial statements showed that as at 31 Dec. 2022, FBNH held N63.18bn in derivative assets at FVTPL, comprising of N15.32bn in forward FX contract, N145mn in FX futures, N47.47bn in currency swap and N228mn in Put options.

First Bank of Nigeria Limited is one of the six direct subsidiaries of FBN Holdings Plc.

Review of the Financial Statements

Income Statement:

Interest Income: The group’s interest income grew by 69.33% from N383.28bn to N226.35bn. Interest from loans and advances to customers was the biggest contributor to the interest income with N135.57bn (H1 2022: N226.35bn). N145.95bn was recorded as interest expense, with N101.66bn a large chunk of the expense being interest paid on deposit from customers.
Fee and commission income: FBNH reported a 25.69% growth in Fee and commission income, as it posted an N88.85bn income (H1 2022: N70.69bn). Electronic banking fees of N34.01bn and letters of credit commissions and fees of N14.75bn were the biggest contributors to the fees and commission income. The group incurred fees and commission expense amounting to N15.14bn (H1 2022: 23.93bn). Fee and commission expense primarily relates to charges raised by switching platforms on holders of First Bank Limited ATM cards, who make use of the other banks machines while transacting business, and SMS alert related expenses.
Foreign exchange income: FBNH reported N98.41bn loss from foreign exchange trading (2021: N16.51bn).
Personnel expenses: The personnel expenses of the group rose by 17.93% from N55.30bn in H1 2022 to N65.22bn.
Other operating expenses: The Banking Group’s operating expenses increased by 29.93% from N116.75bn to N151.70bn. Maintenance, Regulatory cost and Advert and corporate promotions were the biggest items on the operating list with N62.11bn, N24.77bn and N14.29bn respectively.
Profit Before Income Tax: There was a 209.13% growth in the profit before tax, from N66.72bn to N206.26bn. A total of N19.02bn (H1 2022: N9.12bn) was recorded as income tax expense, with N33.61bn paid as corporate tax,.
Profit After Tax: FBNH posted a profit after tax of N187.17bn, 231.07% higher than the N56.53bn it reported in H1 2022.
Earnings Per Share: N5.19 against N1.55 reported in the preceding year.

Balance Sheet:

Total Assets: The Banking Group’s total asset grew by 34.02%, from N10.57tn to N14.17tn. Loans and advances to customers amounting to N5.26tn was the biggest component of the Group’s asset, followed by Investment securities and cash & balances with central banks amounting to N2.95tn (31 Dec. 2022: N2.32tn) and N2.03tn (31 Dec. 2022: N1.79tn) respectively.
Total Liabilities: The total liabilities also increased by 13.50% from N9.58tn to N12.79tn. Deposits from customers constituted a bulk of the liabilities, accounting for N9.04tn (31 Dec. 2022: N7.12tn) of the N12.79tn. Deposits from bank accounted for N1.39bn.
Shareholders’ Fund: The shareholders’ fund went up by 38.42%, from N995.74bn to N1.37bn. The retained earnings, the biggest component of shareholders’ fund accounted for N580.10bn (31st Dec. 2021: N397.70bn).

Cashflow:

Operating activities: N394.44bn was generated from operating activities, significantly higher than the N21.87bn generated in H1 2022.
Investing activities: N957.79bn was used in investing activities, higher than the N106.58bn used in H1 2022.
Financing activities: N244.94bn was generated from financing activities, against N90.60bn generated for the same activity in 2021.
Cash and cash equivalents: As at 30 June 2023, FBNH had cash and cash equivalent of N1.52Tn (30 June 2023: N1.46tn)

About the Company

FBN Holdings is a multifaceted and one of the largest financial services organisation in Africa. It is well-diversified essentially along Commercial Banking, Merchant Banking, Capital Markets, Trusteeship and Insurance brokerage.

The Registered office address of the Company is at 35 Marina, Samuel Asabia House, Lagos, Nigeria.

The principal activities of the Group are mainly the provision of commercial banking services, investment banking services, and provision of other financial services and corporate banking.

FBNH Hold 100% shares of First Bank of Nigeria Limited.

First Bank of Nigeria Limited commenced operations in Nigeria in 1894 as a branch of Bank of British West Africa (BBWA), and was incorporated as a private limited liability company in Nigeria in 1969.

The Bank was the parent company of the Group until 30 November 2012, when a business restructuring was effected in accordance with the directives of the Central Bank of Nigeria and FBN Holdings Plc became the parent company of the Group.