FBN Holdings reports N267.9bn half-year earnings

FBN Holdings plc Tuesday released its results for the half-year (H1) period June 30, 2016. The results at the Nigerian Stock Exchange (NSE) showed the holding company’s gross earnings stood lower at N267.914 billion from N271.265 billion in the corresponding H1’15, down by 1.24 percent.

Interest income declined by 17.78 percent to N169.201 billion in H1’16, from N205.798 billion in H1’15. Interest expense declined to N43.151 billion from N73.102 billion in H1’15, down by 40.97 percent. Net interest income stood lower at N126.050 billion, from N132.696 billion in H1’15, a decline of 5.01 percent.

At a current price of N3.57, the share price of FBN Holdings recorded a 52 weeks high N7 and 52 weeks low of N3. The company’s shares outstanding stood at 35,895,292,792 units, while its market capitalisation stood at N128.253 billion.

FBN Holdings reported profit before tax (PBT) of N45.886 billion in H1’16 from N52.086 billion in H1’15, down by 11.90 percent, while profit after tax (PAT) declined by 10.50 percent to N35.855 billion from N40.061 billion in H1’15.

In a presentation to investors and analysts, the 13 percent year-on-year (yoy) decline in operating expenses was attributable to broad-based reduction in costs across all buckets particularly adverts and corporate promotions (-56.4%), cash handling charges (-38.9%) and passage & travels (- 31.3%). Cost to income ratio (CIR) was down to 47.4% (H1’2015: 61.5%), reflecting cost management initiatives.

FBN Holdings recorded further reduction in operating expenses as a result of the implementation of shared services and automation of the middle office anticipated for 2017. It also saw improved efficiency through rapid process migration to the Central Processing Centre (CPC).

Gross loans at the Group level increased 18.9% year-to-date (Ytd) driven by the approximately 40% devaluation of the Naira.

For FirstBank (Nigeria) gross loans grew by 16.7%; adjusting for devaluation the loan book declined Ytd by 1.3% implying an 18.3% devaluation impact on the entire loan book.

In dollar terms, Ytd, FBN Holdings foreign currency net loans portfolio in FirstBank (Nigeria) declined by about $200 million. Breakdown of the Oil & Gas (O&G) portfolio in upstream, downstream and services as at H12016 is 20.7%, 14.2% and 6.9% respectively (FY 2015: 16.6%, 13.9%, 7.7%). The Holdco’s focus still remains on reducing the oil & gas sector exposure.

“We aim to give priority to non-oil trades, short cycle and self-liquidating transactions,” the holding company financial institution told investors and analysts in the presentation.

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