FBNHoldings declares N166.7bn pre-tax profit in 2021

FBN Holdings Plc audited results for the financial year ended December 31, 2021, posted gross revenue growth by 28.2% to ₦757.3 billion and profit before tax by 99.1% to ₦166.7 billion.

The lender said the 30% growth in loans and advances to ₦2.9 trillion and 16.2% growth in total assets to ₦8.9 trillion reaffirms its commitment to drive revenue and profitability in the completion of the balance sheet clean-up.

The group promised to drive a strategic focus on revenue generation through digital channels and retail product offerings in this 2022 financial year, further pushing its synergy potential to improve its operating model to deliver greater efficiency.

Commenting on the performance, the Chief Executive Officer, FirstBank Group, Dr. Adesola Adeduntan, said: “Following years of strategic restructuring of the Bank’s balance sheet and operations, the commercial banking business is beginning to transition into a sustained growth phase delivering performance commensurate to the size of our business and capabilities of our people.

“Gross earnings grew by 28.2% to ₦757.3 billion (Dec. 2020: ₦590.7 billion) while interest income remained challenged given the moderated interest rate environment negatively impacting yields; as a result, interest income declined 4.1% to ₦369.0 billion (Dec. 2020: ₦384.8 billion).

“To mitigate the effect of the low interest rate on investment securities and revenue generation, we remained deliberate with our intensified deposit mobilization and funding strategy to support enhanced loan growth at optimised rates leading to a 5.7% increase in interest expense to ₦140.8 billion (Dec. 2020: ₦133.2 billion). As a result, net interest income declined by 9.3% to ₦228.2 billion (Dec. 2020: ₦251.6 billion).

“Conversely, non-interest revenue grew by 96.1% to ₦364.6 billion (Dec. 2020: ₦185.9 billion) on the back of increased fees and commission income, treasury activities and other operating income.

“Additionally, and in line with our focus to further enhance our revenue generation capacity, First Pension Custodian Limited, a subsidiary of FBNHoldings’ flagship subsidiary, First Bank of Nigeria Limited, entered into a definitive agreement with Access Bank Plc for the planned acquisition of the entire share capital of Access Pension Fund Custodian Limited held by Access Bank Plc.”

FBNHoldings hoped that this will further boost its market share in the industry, aid revenue diversification and support annuity income.

Looking ahead, Adeduntan said: “We will continue to create quality loans with focus on retail lending driven by technology as we continue to grow non-interest income to further diversify revenue.”

We are also increasingly leveraging technology – artificial intelligence, robotics, and other next-generation technological advancements, to deepen collaboration and further drive operational efficiency across the Group.

Operating environment

In 2021, FBNH operated in a challenging operating environment that was pressured by high inflation and currency devaluation, leading to increase in operating expenses by 14.2% to ₦334.2 billion (Dec. 2020: ₦292.5 billion). However, this 14.2% is below the inflation level (Dec. 2020: 15.6%) whilst regulatory cost also rose during the period, up 23.2% year-on-year (y-o-y).

 Despite the inflationary push factors, operating income grew 35.5% to ₦592.8 billion (Dec. 2020: ₦437.6 billion), resulting in an improvement in cost to income ratio to 56.4% (Dec. 2020: 66.8%).

Adedutan continued: “Going forward, we will sustain our focus towards further improving efficiency by containing cost and increasing revenue.

Deposit from Customers increased by 19.5% y-o-y to ₦5.9 trillion (Dec 2020: ₦4.9 trillion) reaffirming our strong market access and robust funding base.

“Our investment in agent banking, digitalisation and deployment of digital platforms which our customers have adopted, improved customer penetration and deepened our solid retail franchise. This continues to provide us with access to stable funding, reducing our cost of fund ratio to 2.1% (Dec. 2020: 2.3%) while supporting the float of our current and savings account (CASA) at 91.2% (First Bank of Nigeria).

Total assets grew 16.2% y-o-y to ₦8.9trillion (Dec 2020: ₦7.7trillion) driven by a 30.0% y-o-y increase in customer loans and 26.3% increase y-o-y in investment securities. Cash and balances with Central Banks, loans to banks & customers and investment securities constitute 87.2% of total assets (Dec 2020: 83.4%).

“We continue to record progress in Asset Quality and Risk Management stemming from our retooled and strengthened risk management architecture. On the back of this, non-performing loan ratio further declined to 6.1% (Dec 2020: 7.7%) while coverage ratio improved to 62.2% (Dec 2020: 48.0%).” he said.

“With a cleaner balance sheet and resilient earnings generating capacity, FirstBank (Nigeria) was able to accrete capital buffers from organic earnings. Hence, despite the increase in loans and advances, Capital Adequacy Ratio (CAR) remained steady, marginally increasing to 17.4% (Dec 2020: 17.0%). “We are also increasingly leveraging technology – artificial intelligence, robotics, and other next-generation technological advancements, to deepen collaboration and further drive operational efficiency across the Group.”

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