WorldStage Newsonline– First Bank Nigeria Holding Plc has released its Half year (H1) 2024 results with an improvement in its profitability as the bank’s profit before tax (PBT) and and profit after tax (PAT) rose by 100.9% y/y and 93.7% y/y to N412.0bn and N360.3bn, respectively.
As a result, the Group’s Earnings Per Share (EPS) grew 94.7% y/y from N5.19k in H1-2023 to N10.11k.
The trailing 12-month Return on Average Equity (ROAE) rose by 540bps to 36.9% in H1-2024, previously 31.5% in H1-2023.
The results showed that Gross Earnings (GE) grew 2.2x to settle at N1.4tn compared to the N641.0bn in the corresponding period of 2023. The top-line growth was driven by increases in its Interest Income and non-Interest Income, which grew by 155.4% y/y and 71.0% y/y, respectively.
Overall, profitability improved as Profit Before Tax (PBT) and Profit After Tax (PAT) grew by 100.9% y/y and 93.7% y/y, respectively. We review the H1-2024 earnings below and highlight our expectations for the rest of the year.
FBNH’s Interest Income expanded from N371.1bn to N947.7bn due to the 182.8% y/y increase in interest earned on investment securities (H1-2024: N307.0bn; H1-2023: N108.6bn), given the elevated interest rate environment in the country.
The 131.8% y/y growth in interest earned from loans and advances to customers spurred the advancement in interest income. This is on account of the 42.4% y/y growth in the Bank’s loan book to customers, which settled at N9.1tn in the period under review. Thus, the Group’s Earnings Yield climbed to 14.1% in H1-2024, up 500bps from 9.1% in H1-2023.
There was a significant jump of 219.0% y/y in Interest Expense from N135.7bn in H1-2023 to N432.8bn in H1-2024. Notably, the Group’s Cost of Funds rose by 250bps from 2.7% in H1-2023 to 5.2% in H1-2024. This is on the back of the 189.7% y/y increase in interest paid on deposits from customers from N93.6bn in H1-2023 to N262.7bn in H1-2024. The Group’s deposits grew by 42.7% to N17.8tn in the period under review from the N12.5tn recorded in Dec-2023.
Nevertheless, FBNH’s Net Interest Margin (NIM) rose to 7.7% 5.8% as Net Interest Income (NII) expanded by 118.7% y/y to N514.9bn in H1-2024.
For non-Interest Income, the bulk emanated from net gains from financial instruments at fair value through profit and loss, as it grew by 89.5% y/y from N228.0bn in H1-2023 to N432.2bn in H1-2024. Additionally, the 49.1% y/y climb in net fees and commission income generated to N110.8bn in H1-2024 (previously, N72.0bn) supported the growth in Non-Interest Income. This is due to the 168.1% y/y and 87.1% y/y increase in credit-related and account maintenance fees. The Group declared Foreign Exchange (FX) losses of N165.0bn in H1-2024 (due to revaluations), up 68.2% y/y from the loss of N98.1bn declared in the corresponding period of 2023.
Operating Expenses grew by 95.0% y/y from N228.5bn in H1-2023 to N445.7bn in H1-2024, buoyed by the nation’s heightened inflationary pressures and deteriorating macroeconomic conditions. Personnel expenses and depreciation rose by 110.0% y/y and 111.3% y/y to N134.42bn and N30.5bn, respectively. Additionally, the 63.2% y/y increase in the AMCON surcharge to N77.3bn contributed to the rise in operating expenses. Nevertheless, the Group tried to manage its efficiency as operating income expanded by 94.0% y/y from N490.1bn in H1-2023 to N950.6bn in H1-2024.
However, FBNH’s Cost-to-Income Ratio (CIR) fell by 25bps from 46.6% in H1-2023 to 46.9% in the period under review.
Moreover, FBNH’s total assets expanded by 38.3% from N16.9tn in FY-2023 to N23.4tn in H1-2024, supported primarily by loan book growth. The Group’s total loans and advances climbed by 45.6% from N8.4tn in FY-2023 to N12.2tn in H1-2024. As a result, the Loan-to-Deposit Ratio (LDR) improved by 138bps to 68.9%, well above the Central Bank’s regulatory minimum of 65.0%. Additionally, investment securities settled at N12.2tn in H1-2024, up 43.3% compared to the N8.4tn recorded in FY-2023.
Regarding asset quality, FBNH’s Non-Performing Loan (NPL) ratio slightly improved to 4.2% in H1-2024 from 4.3% in the corresponding period of 2023. Impairment charges for the period climbed by 64.0% y/y to print at N93.0bn, as the Group’s NPL coverage ratio printed at 96.5% (previously, 82.2% in H1-2023). This implies that FBNH is making enough provisions for imminent bad loans. As a result, the Group’s Cost of Risk surged from 1.9% in H1-2023 to 2.3% in the period under review.
Meanwhile, the shareholder’s fund of the Group grew by 26.7% y/y from N1.7tn in FY-2023 to N2.2tn in H1-2024 following improved business activities. Consequently, the Group’s Book Value Per Share (BVPS) rose to N61.7k in H1-2024 compared to its print of N38.4k a year ago.
