FBN Holdings sees progressive improvement in non-performing loans, posts N35.6bn H1 profit

A strategic curbing of non-performing loans by FBN Holdings is progressively helping its banking arm to reduce its NPL levels from 24.4 percent to 22 percent year-to-date, according to its half year financial report released Thursday and seen by Businessamlive.

The company announced gross earnings of N288.8 billion, up 7.8 percent from N267.9 billion recorded in the corresponding period of 2016 in its unaudited results for the six months ended 30 June 2017.

To this end, the company recorded a profit before tax of N35.6 billion, down 22.4 percent from the N45.9 billion it posted in 2016.

Profit after tax dipped by 17.8 percent to N29.5 billion from N35.9 billion in the corresponding period of 2016.

It also reported improvement in non-performing loans as an impairment charge for credit losses of N62.4 billion fell by 10.7 percent from N69.9 billion credit losses recorded a year ago.

The company’s income statement indicates that net-interest income amounted to N164.1 billion, up 30.2 year-on-year from N126.1 billion in Jun 2016. However, non-interest income fell by 46.3 percent to N50.5 billion N94.1 billion a year ago.

Total operating income equally fell 2.6 percent to N214.4 billion from N220.1 billion in June 2016. On the other hand operating expenses went up 11.8 percent to N116.6 billion as against the N104.3 billion in June 2016

In its statement of financial position, the company reported a 3.0 percent increase in total assets from N4.7 trillion in December 2016 to N4.9 trillion in June 2017.

However, customer deposits went down 3.5 percent from December 2016 to settle at N3.0 trillion in the period under review.

Customer loans and advances year-to-date equally fell by 4.1 percent to (net) of N2.0 trillion from N2.1 trillion.

The company’s key ratios for the period under review are as follow: Post-tax return on average equity of 9.9 percent (Jun 2016: 12.0%); Post-tax return on average assets of 1.2 percent (Jun 2016: 1.6%); Net-interest margin of 8.5 percent (Jun 2016: 7.2%); and cost to income ratio of 54.4 percent (Jun 2016: 47.4%).

Others are NPL ratio of 22.0 percent (Jun 2016: 22.8%, Dec 2016: 24.4%); 50.4 percent liquidity ratio (FirstBank (Nigeria) (Jun 2016: 55.9%, Dec 2016: 52.7%); 17.6 percent Basel 2 CAR (FirstBank (Nigeria) (Jun 2016: 15.4%, Dec 2016: 17.8%); 26.7 percent Basel 2 CAR (FBN Merchant Bank) (Jun 2016: 27.9%, Dec 2016: 22.6%)

“FBNHoldings has again demonstrated its strong revenue generating capacity in the current economic environment reporting gross earnings of N288.8 billion – up 7.8% y-o-y. In line with our strategic focus on improving asset quality; cost optimisation; and, enhancing revenue generation, we are beginning to see improvement across a number of metrics associated with these initiatives,” UK Eke, the Group Managing Director said.

He said the company’s focus is on enhancing the quality of its loan book, which is reflected in a decline in non-performing loans, and a reduction in impairment charge following improvement in the asset quality outlook, adding that the company will continue to prioritise on it through the rest of this year.