FBN Holdings post N417b gross earnings

FBN Holdings Plc gross earnings rose by seven per cent to N417.3 billion in 2016, up from N390 billion in its nine-month operations ended September 30, 2016.

However, Profit After Tax (PAT) dipped 15.3 per cent to N42.5 billion, down from N50.2 billion achieved in the corresponding period in 2015.

The bank’s unaudited result for the nine month period also showed Profit Before Tax (PBT) decline by 3.5 per cent, from N59.6 billion in 2015 to N57.5 billion during the review period.

According to the bank, despite the 56.5 per cent increase in non-interest income to N131.0 billion, interest income declined by 7.3 per cent to N278.6 billion from N300.4 billion achieved in the previous year.

Net-interest income improved by 5.2 per cent from N192.9 billion to N202.9 billion driven by a 38.4 per cent reduction in interest expense on customers’ deposits to N56.7 billion.

The banking group explained that “This was partly offset by a 7.3 per cent decline in interest income, largely due to a 4.7 per cent y-o-y drop in loans to customers to N193.0 billion (September 2015: N202.5 billion) due to tightening of our risk acceptance criteria, as well as 12.7 per cent year-on-year (y-o-y) decrease in interest on investment securities to N74.1 billion (September 2015: N85.0 billion).

“Cost of funds declined to 2.7 per cent (Sept 2015: 4.0 per cent) as we deliberately optimised our deposit mix in a rising interest rate regime. Average yields on customers’ loans, investment securities and loans to banks decreased to 12.9 per cent, 9.0 per cent and 2.9 per cent respectively from 13.2 per cent, 13.6 per cent and 3.9 per cent the year prior. Consequently, the blended yield on interest earning assets declined to 10.2 per cent (September 2015: 12.1 per cent) resulting in a net interest margin decrease to 7.5 per cent (September 2015: 7.7 per cent).

Notwithstanding the drop in profits, FBN Holdings maintained that its “performance has again demonstrated its underlying resilience despite the ongoing macroeconomic and business challenges with gross earnings and profit before tax closing at N417.3 billion and N57.5 billion respectively. This has been achieved through sustained revenue generation as well as increased cost efficiencies.

“Although the current currency weakness is a challenge for our remedial process, we are steadfastly progressing on improving the overall risk management culture, governance and technology as well as the degree of compliance across the Group. The Group remains committed to ensuring sustained improvement in our performance with a view to restoring shareholder value.”