FBN Holdings Plc (FBNH) published its nine months unaudited numbers for the period ended September 30, 2023, which showed that the Holdco recorded a 160.6% increase in earnings per share to N6.54 against N2.51 in 2022.
Market analyst attributes the substantial earnings expansion to the increases across the group’s funded and non-funded income lines. In the third quarter 2023, FBNH’s standalone EPS was N1.35,which is 40.6% higher than N0.96 in the third quarter of 2022.
FBNH delivered a 71.1% in interest income to N633.80 billion in nine months 2023, In line with the banking sector trend, the rise in interest income was largely driven by elevated yields in the fixed income and an increase in earning assets, which was 30.3% to N8.33 trillion
As a result, the group’s earnings yields increased by 250bps to 10.5% in the review period. Parsing through the contributory lines in nominal terms, the group recorded higher income from loans and advances to customers, which stood at 53.9% to N414.03 billion, investment securities 132.1% to N186.72 billion, and loans and advances to banks 72.1% to N33.06 billion.
Elsewhere, interest expense advanced by 112.0% to N256.11 billion as the group incurred higher costs on its deposits from customers 125.8% to N174.44 billion and financial institutions 114.4% to N54.43 billion, due to the elevated interest rates in the debt market and deteriorating funding mix (CASA 9M-23: 77.4% | 2022FY: 84.8%).
In the same vein, the group incurred higher costs on its borrowing, 49.9% to N27.23 billion. Accordingly, the net interest income expanded by 19.4% to N268.93 billion. Ultimately, the group’s net interest margin increased by 80bps to 6.2% in the period under review.
The group recorded a higher non-interest income, 108.5% to N327.29 billion, majorly driven by the higher gains from investment securities 61.6% to N43.55 billion, net fees & commission income 30.8% to N118.98 billion, and FX revaluation gains, 10.24ppts to N246.08 billion.
The preceding was sufficient to offset the losses N96.67 billion incurred on FX trading. It was highlighted that the income from fees and commission (17.9% q/q to NGN45.28 billion) was the quarter’s major drive for non-interest income growth.
Further down, operating expenses inched higher by 33.3% to N352.28 billion, primarily driven by an increase in personnel expenses, which was up by 33.3% to N113.19 billion, AMCON levy stood at 19.5% to N70.83 billion, depreciation and amortization was 19.3% to N24.45 billion, and NDIC premium, 7.3% to N11.09 billion.
Considering the group’s operating income that was up 68.4% growing faster than OPEX, the cost-to-income ratio settled lower at 56.6% relative to 71.5% in the prior year. Profitability was stronger in the period under consideration, as profit after tax was 156.3% higher at N270.33 billion.
FBNH’s ROAE and ROAA ultimately settled at 26.6% (vs 9M-22: 13.7%) and 2.5% (vs 9M-22: 1.3%), respectively.
The financial performance of FBNH was impressive, particularly the higher income from the group’s core banking and e-banking activities. Going into 2023 year end, market watchers are optimistic that the combined impact of the elevated yield environment, revaluation gains recorded in the year, and the CRR reduction for merchant banks from 32.5% to 10.0% will support the group’s earnings growth.
