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FBN Holdings annual profit more than doubles to N310 billion but credit quality worsens

By admin Feb 1, 2024
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FBN Holdings, the parent company of Nigeria’s oldest bank FirstBank, attained an all-time peak in its profit level last year after a big bulge in interest income helped net profit jump 127.6 per cent to N309.9 billion.

The group’s unaudited earnings report hit the market Thursday, a day after its second-biggest shareholder, Femi Otedola, was announced as the new chair of its directors’ board.

Barbican Capital Limited, which represents the interest of industrialist Oba Otudeko, is FBN Holdings’ top shareholder, holding 13.6 per cent of the shares.

Shares at FBN Holdings were up 9.9 per cent at 12:29 WAT on Lagos Customs Street, following the news, just a little shy of the 10 per cent daily cap, making it the sixth best-performing stock of the 155 equities listed on the bourse.

Gross earnings went up 76.9 per cent to N1.5 trillion, helped by the commercial banking division of FBN Holdings, which contributed 92.2 per cent of revenue.

Interest income climbed 66.3 per cent to 917.7 billion as the lender leveraged the high-interest rate environment in the banking industry to charge borrowers more for loans.

Net interest income, which measures the difference between interest earned by lenders and how much they pay to savers for keeping their deposits, rose to N530 billion from N363.2 billion.

A sharp deterioration in the loan quality of the lender was one of the few black spots that blighted what would have been an impeccable result for the group.

The cash FBN provisioned to cover potentially bad loans soared nearly threefold to N200.4 billion. It was essentially the price the lender paid for high borrowing costs, considering that borrowers tend to default on their obligations in the face of elevated lending rates, causing impairment charges to rise.

READ ALSO: Otedola joins FBN Holdings’ board of directors

Fees and commission income were up by 42.3 per cent, driven by higher revenue from letters of credit.

Against the current trend where lenders with foreign currency-denominated assets are reaping big from a weaker naira after conversion into the local currency, FBN Holdings incurred as much as N350.3 billion in foreign exchange loss in contrast to a gain of N22.4 billion a year ago.

No clarification was provided in the notes to the document on why this is so.

Profit before tax rose 56.4 per cent to N362.2 billion, while profit for the period increased to N309.9 billion from N136.2 billion a year earlier.

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