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By Chinwendu Obienyi
Despite the harsh operating environment, FBN Holdings Plc recorded a robust and impressive for the full year (FY) of 2023 as its gross earnings grew to N1.517 trillion from N805.13 billion recorded in the corresponding period of 2022.
This represents an 88.5 per cent increase. According to a filing obtained from the NGX’s website, Earnings Per Share (EPS) for the group grew by 128.3 per cent to N8.56 from N3.75 recorded in the previous month.
Similarly, the group’s profit before tax (PBT) grew to N362.24 billion from N157.90 billion, representing a 129.4 per cent while the profit after tax (PAT) rose by 127.4 per cent to N310.01 billion from N136.31 billion recorded in 2022.
Also, Interest income grew by 66.3 per cent year-on-year (y/y) to N917.71 billion, reflecting improved income from expanded loans and advances, and investment securities (due to the high yield environment). Specifically, the group’s income from loans and advances to customers (+48.9 per cent y/y to N600.83 billion) and investment securities (+195.2 per cent y/y to N271.20 billion) offset the decline in income from loans and advances to banks (-19.1% y/y to N45.67 billion).
The notable rise in income from loans and advances to customers according to analysts at Cordros Research, may be ascribed to a combination of revalued foreign-currency denominated assets and robust risk asset creation (+68.0 per cent y/y to N6.36 trillion) in the period under review.
Similarly, interest expense surged by 105.5 per cent y/y to N387.68 billion, fueled by higher cost on customer deposits (+126.0 per cent y/y to N264.84 billion). The impact was exacerbated by a less favourable funding mix, with CASA settling lower at 76.2 per cent in 2023FY, compared to 84.8 per cent in 2022FY.
Additionally, the Holdco faced higher interest payments on deposits from other banks, which rose by 196.8 per cent y/y to N66.62 billion, propelled by a substantial 71.3 per cent y/y expansion in deposits from financial institutions, totaling N1.81 trillion.
Notably, non-interest income (NII) expanded markedly by 149.6 per cent y/y to N566.99 billion, primarily triggered by the increased gains from investment securities (+1082.8 per cent y/y to N722.39 billion), which effectively offset the net foreign exchange revaluation losses (-401.9x y/y to N375.88 billion) in the period.
Further out, operating expenses settled higher by 46.8 per cent y/y to N534.34 billion undermined by the higher personnel expenses (+48.1 per cent y/y to N173.89 billion), as well as the costs incurred on maintenance (+76.8 per cent y/y to N75.94 billion) and advert and corporate promotions (+162.2 per cent y/y to N31.81 billion).
Elsewhere, AMCON levy (+26.0 per cent y/y to N50.10 billion) and NDIC premium (+9.6 per cent y/y to N29.34 billion) also advanced in the period. Nevertheless, the faster growth in operating income (+71.8 per cent y/y) led to a moderation in the Holdco’s cost-to-income ratio (after accounting for LLEs), resulting in a lower ratio of 59.6 per cent relative to the 69.7 per cent recorded in 2022 FY.
