FBN Holdings Net N59.74bn Profit, Offers 26k dividend

BY CHINYERE OBIORA, LAGOS – The Board of FBN Holdings Plc is excited that its audited financials for the year ended December 31, 2018 has turned out the best since the 2015 financial year.

According to the company, the books, showing a 31.36 per cent growth in net profit, captured the remarkable performance as being supported by a combination of 42.22 per cent reduction in impairment charge for credit losses as well as the 51.86 per cent net insurance premium revenue increase.

Other factors include; 53.96 per cent increase in net gains on foreign exchange as well as net gains on sales of investment securities of 119.66 per cent.

Enthusiastic over their flaunted impressive performance, the directors proposed a dividend of 26 kobo from the Earnings Per Share (EPS) of N1.66, representing an increase of 58.23 from the 2017 figure of N1.05.

They further explained that the year’s gross earnings, which stood at N496.858 billion, were derived from transactions in Nigeria while N86.819 billion came from outside Nigeria. The figure dropped by 2.01 per cent to N583.477 billion within the period under review compared to the 2017 reported figure of N595.446 billion.

The breakdown showed that the commercial banking group contributed the lion’s share of N514.793 billion, followed by N45.259 billion from the merchant banking and asset management group; with the insurance group bringing in about N22.663 billion.

However, the company’s interest income dropped by 7.49 per cent to N434.410 billion from N469.586 billion, helped by the N402.379 billion  from commercial banking.

On the other hand, interest expenses grew from N138.064 billion to N150.242 billion, up by 8.82 per cent. Net interest income, therefore, stood at N284.168 billion, showing a decline of 14.28 per cent from prior year’s N331.522 billion.

Similarly, impairment charge for credit losses, which went down by N63.513 billion from N150.424 billion to N86.911 billion, indicated that the bulk of it was N87.871 billion by the commercial banking group. This follows  net interest income after impairment charge for credit losses stood at N197.257 billion, increasing by  8.92 per cent from N181.098  billion.

Net insurance premium revenue climbed to N15.541 billion from N10.234 billion; fee and commission income increased to N92.724 billion from N74.453 billion in 2017, mainly the N34.029 billion from money transfer commission, as against N24.989 billion in preceding year, followed by N12.329 billion from account maintenance, which was almost double the N6.686 billion in 2017, just as brokerage and intermediations contributed N11.901 billion, a momentous boost compared to N1.554 billion in the preceding year, among others.

Also, fees and commission expenses rose by 43.02 per cent from N12.117 billion to N17.33 billion in the year under review.

The books also indicated that net gains on foreign exchange stood at N32.636 billion from N21.062 billion; net gains on sales of investment securities climbed to N5.733 billion from N2.61 billion; just as net losses from financial instruments at fair value stood at N3.135 billion from N11.117 billion gains in 2017.

Furthermore, the group earned dividend income of N2.312 billion during the period, representing 12.62 per cent from N2.053 billion; other operating income dropped 17.12 per cent from N3.901 billion to N3.233 billion; insurance claims for the period rose 16.73 per cent from N4.041 billion to N4.717 billion.

Personnel expenses increased by 9.01 per cent to N93.395 billion from N85.678 billion; depreciation of property, plant, and equipment crawled by 5.88 per cent from N11.6 billion to N12.282 billion; just as amortization of intangible assets increased 27.02 per cent from N4.201 billion from N5.336 billion.

Operating expenses rose from N134.799 billion from N147.976 billiinn, representing a 9.78 per cent, rise; operating profit improved by 20.66 per cent from N54.092 billion to N65.265 billion; the share of profit of associates dropped from N430 million to N23 million.

Profit before tax, rose 19.75 per cent up from N54.522 billion in 2017 to N65.288 billion; income tax expense dropped 38.67 per cent from N9.04 billion to N5.544 billion; resulting in a net profit of N59.744 billion, from N45.482 billion in the corresponding full-year of 2017. The group is yet to achieve its 2014 level of N84.011 billion net profit, which translated to EPS of N2.35 kobo

The external auditors- PwC, as part of key audit matter drew attention to the balance sheet, where gross balance of customer loans and advances for the period stood at N2.069 trillion while associated impairment reserve stood at N385 billion, at a time measurement of impairment losses remains highly subjective and involves the exercise of significant judgment and use of complex models and assumptions.

Meanwhile, total assets for the period under review rose to N5.568 trillion, up from N5.236 trillion, with customer loans and advances of N1.683 trillion, down from N2.001trillion; just as investment securities increased from N1.248 trillion to N1.663 trillion. Total liabilities increased from N4.562 trillion in the preceding year  to N5.037 trillion in 2018; of which customer deposits rose from N3.143 trillion to N3.486 trillion , representing a N343.353 billion or 10.92 per cent rise; resulting in N530.647 billion shareholders’ funds, down by 21.76 per cent from N673.719 billion in 2017.

Meanwhile, qualification date for the dividend has been set for April 22, 2019, while closure of register is billed for April 23 to 29; after which shareholders are expected to consider and possibly approve the account and dividend offer at the annual general meeting on May 3. Payment is thereafter fixed for May 6, 2019.