Focus for the week: FBN HOLDINGS PLC FY’24 Earnings Release

Earnings jump 113% y/y on core-banking gains

FBNH released its FY’24 results, posting a 113% y/y increase in Gross Earnings to ₦3.3 trillion, exceeding our expectations by 36%. As observed across the banking sector, the strong performance was fueled by a 158% y/y jump in Interest earnings to ₦2.4 trillion, primarily driven by a 123% y/y surge in loans and advances to customers, which printed at ₦1.36 trillion. Conversely, the bank’s Non-Interest Revenue expanded at a more moderate pace, rising 43% y/y to ₦846 billion (FY’23: ₦591 billion), impacted by a 16% decline in Investment and Trading income.

On the funding side, Interest Expense surged by 163% y/y to ₦1.0 trillion, pushing Net Interest Income 52% higher y/y to ₦1.4 trillion—exceeding our ₦1.1 trillion estimate by 24%. In terms of costs, impairments on loans and advances climbed 16% y/y to ₦410 billion, surpassing our ₦303 billion forecast by 26%, while Operating Expense rose 73% y/y to ₦965 billion. Nonetheless, the bank’s cost-to-income ratio declined by 580bps y/y to 43.0%. Overall, Profit Before Tax (PBT) soared 142% y/y to ₦862 billion, while Profit After Tax (PAT) rose 139% y/y to ₦737 billion.

2025 Performance outlook: core banking to drive earnings

Like its peers under our coverage, FBNH’s core-banking earnings exhibited robust growth in Q4’24. Interest Income surged 146% y/y to ₦787 billion— 15% above Q3’s ₦685 billion—while Interest Expense grew 81% y/y to ₦269 billion but declined 17% q/q from ₦326 billion in Q3. Consequently, Net Interest Income increased 203% y/y to ₦517 billion, and grew by 44% q/q.

The bank’s earnings expansion was largely underpinned by loan book growth, amid elevated rates during the quarter. FBNH’s loan book closed the year at ₦8.9 trillion, reflecting a 41% increase from the year’s opening balance, despite a 4% contraction (-₦411 billion) q/q. Given our expectation of sustained high interest rates in 2025, we have revised our Interest Income forecast upward to ₦4.2 trillion (Previous: ₦3.6 trillion), alongside an Interest Expense estimate of ₦1.5 trillion (Previous: ₦965 billion), thus forecasting a net interest margin of 50% (FY’24:42%) and COF of 4.0% (FY’24: 3.2%).

What shaped the past week? 

Equities: This week, the local bourse closed on a positive note, gaining 2.00% w/w, driven by buying interest in the Industrial Goods space. Notably, gains in DANGCEM (+21.83% w/w), BETAGLAS (+10.06% w/w), and AUSTINLAZ (+5.56% w/w) boosted the Industrial Goods index by 10.36% w/w. Similarly, renewed demand for SUNUASSUR (+27.94% w/w), CONHALLPLC (+20.07% w/w), and CORNERST (+5.15% w/w) pushed the Insurance index up by 2.52% w/w. However, declines in BUAFOODS (-10.00% w/w) and GOLDBREW (-9.91% w/w) weighed on the Consumer Goods (-3.63% w/w). Also, losses in ARADEL (-6.90% w/w) and CONOIL (-1.86% w/w) drove the Oil & Gas sector down (-2.30% w/w), capping overall market gains.

Fixed Income: This week, the CBN conducted an OMO bills auction, offering ₦600 billion across the 355-day and 362-day maturities. The auction attracted total subscriptions of ₦1.9 trillion, with total sales reaching ₦1.4 trillion. Stop rates were set at 21.32% (previously 22.50%) for the 355-day bill and 21.45% (previously 22.65%) for the 362-day bill.

In the secondary market, strong buy-side activity at the short to mid end of the curve pushed bond yields down by an average of 15bps w/w. A similar trend was observed in the NTB and OMO markets, where sustained demand drove yields lower by 35bps w/w and 55bps w/w, respectively.

Currency: At the NAFEM, the Naira depreciated by ₦8.09 w/w to close at ₦1509.70 per dollar.

Domestic Economy: According to the Nigerian Upstream Petroleum Regulatory Commission’s (NUPRC), Nigeria exceeded its OPEC oil production quota in January, reaching an average of 1.54 million barrels per day, slightly above the 1.5 mbpd target. This marks a significant improvement, despite struggling to meet production targets throughout 2022, 2023, and 2024, with the country’s output surging from 1.4 mbpd in December 2024 to start the new year strongly. However, production, which included both crude and condensates, rose to 1.74 mbpd, up from 1.6 mbpd in December 2024, falling short of the commissions 2025 target of 2mbpd.

Global: A number of global stocks inched higher on Friday, while U.S. Treasury yields declined, as softer U.S. economic data, and new tariff announcements fuelled hopes that the Federal Reserve could adopt a more aggressive stance on rate cuts.

On Wall Street, U.S. stocks advanced, driven by gains in the energy sector, while consumer staples lagged. The Dow Jones Industrial Average dipped 0.06% to 44,685.58 ppts, the S&P 500 inched up 0.07% to 6,119.65 ppts, and the Nasdaq Composite gained 0.13% to 19,970.63 ppts. All three major U.S. indexes were poised for a weekly gain.

In the bonds market, the yield on the 10-year Treasury fell to 4.47% from 4.54% on Thursday, continuing its sharp fluctuations since the Federal Reserve began cutting interest rates in September to stimulate borrowing, support economic growth, and lift asset prices.

In Europe, the STOXX 600 index declined 0.29% but remained on track for its eighth consecutive weekly gain, outperforming U.S. stocks since the start of the year.

What will shape markets in the coming week?

Equity market: We anticipate a mixed-to-negative sentiment in the near term as investors digest recent gains and adjust positions ahead of fresh market catalysts. Overall, we expect sideways to cautious trading in the sessions ahead, with investors likely to remain selective, focusing on earnings releases and macroeconomic drivers for direction.

Fixed Income: In next week’s trading session, we expect a cautious market, as investors look to inflation data and the upcoming MPC meeting for direction.