By Chinwendu Obienyi
FBN Holdings (FBNH) Plc has announced a 71.1 per cent year-on-year (y/y) in interest income to N633.80 billion in 9 months of 2023 as against N370.36 billion recorded in the corresponding period of 2022. In line with banking sector trends, the rise in interest income was largely driven by elevated yields in the fixed income and an increase in earning assets (+30.3 per cent year-to-date to N8.33 trillion).
As a result, the group’s earnings yields increased by 250 basis points (bps) y/y to 10.5 per cent in the review period. Parsing through the contributory lines in nominal terms, the group recorded higher income from loans and advances to customers (+53.9 per cent y/y to N414.03 billion), investment securities (+132.1 per cent y/y to N186.72 billion), and loans and advances to banks (+72.1 per cent y/y to N33.06 billion).
According to its financial statements filed with the Nigerian Exchange Limited (NGX), the group recorded a 160.6 per cent y/y increase in earnings per share to N6.54 as against N2.51 recorded in 2022.
The group’s revenue jumped 80.1 per cent from N540.20 billion in 2022 to N985 billion, while its profit before tax (PBT) and profit after tax (PAT) closed the period at N270.33 billion and N236.50 billion, respectively.
Elsewhere, interest expense advanced by 112.0 per cent y/y to N256.11 billion as the group incurred higher costs on its deposits from customers (+125.8 per cent y/y to N174.44 billion) and financial institutions (+114.4 per cent y/y to N54.43 billion) due to the elevated interest rates in the debt market and deteriorating funding mix (CASA 9M-23: 77.4 per cent | 2022FY: 84.8 per cent). In the same vein, the group incurred higher costs on its borrowing (+49.9 per cent y/y to N27.23 billion). Accordingly, the net interest income ex-LLE expanded by 19.4 per cent y/y to N268.93 billion. Ultimately, the group’s net interest margin (NIM) increased by 80bps y/y to 6.2 per cent in 9M-23.
The group recorded a higher non-interest income (+108.5 per cent y/y to N327.29 billion), majorly driven by the higher gains from investment securities (+61.6 per cent y/y to N43.55 billion), net fees & commission income (+30.8 per cent y/y to N118.98 billion), and FX revaluation gains (+10.24ppts y/y to N246.08 billion).
The preceding was sufficient to offset the losses (N96.67 billion) incurred on FX trading. Further down, operating expenses inched higher by 33.3 per cent y/y to N352.28 billion, primarily driven by an increase in personnel expenses (+33.3 per cent y/y to N113.19 billion), AMCON levy (+19.5 per cent y/y to N70.83 billion), depreciation and amortization (+19.3 per cent y/y to N24.45 billion), and NDIC premium (+7.3 per cent y/y to N11.09 billion). Considering the group’s operating income (+68.4 per cent y/y) growing faster than OPEX, the cost-to-income ratio (ex-LLE) settled lower at 56.6 per cent relative to 71.5 per cent in the prior year.