FBN Holdings Plc. (FBNH) announces its audited results for the financial year ended December 31, 2022.
Selected Financial Summary
| Income Statement | |||
| (₦ billion) | FY
2022 |
FY
2021 |
∆% |
| Gross earnings | 805.1 | 757.3 | +6.3% |
| Interest income | 551.9 | 369.0 | +49.6% |
| Net interest income | 363.2 | 228.2 | +59.2% |
| Non-interest income[1] | 227.2 | 364.3 | -37.7% |
| Operating income[2] | 590.4 | 592.6 | -0.4% |
| Impairment charges for losses | 68.6 | 91.7 | -25.2% |
| Operating expenses | 364.1 | 334.2 | +9.0% |
| Profit before tax | 157.7 | 166.7 | -5.4% |
| Profit for the year [3] | 136.1 | 151.1 | -10.0% |
| Basic EPS (kobo)[4] | 3.74 | 4.17 | -10.3% |
| Proposed dividend per share (kobo) | 50 | 35 | +42.9% |
| Statement of Financial Position | |||
| (₦ billion) | FY
2022 |
FY
2021 |
∆% |
| Total assets | 10,578 | 8,932 | 18.4% |
| Customer loans & advances (Net) | 3,789 | 2,882 | 31.5% |
| Customer deposits | 7,124 | 5,849 | 21.8% |
| Key Ratios % | FY
2022 |
FY
2021 |
| Post-tax return on average equity[5] | 14.5 | 18.4 |
| Post-tax return on average assets[6] | 1.4 | 1.8 |
| Earnings yield[7] | 8.8 | 7.3 |
| Net-interest margin[8] | 5.8 | 4.5 |
| Cost of funds[9] | 2.3 | 2.1 |
| Non-interest revenue/operating income | 38.5 | 61.5 |
| Cost to income[10] | 61.7 | 56.4 |
| Gross loans to deposits | 55.2 | 51.4 |
| Capital adequacy (FirstBank (Nigeria)) | 16.8 | 17.4 |
| Capital adequacy
(FBNQuest Merchant Bank) |
16.3 | 19.5 |
| NPL/Gross Loans | 4.3 | 6.1 |
| NPL coverage[11] | 86.6 | 62.2 |
| PPOP[12]/impairment charge (times) | 3.6 | 3.0 |
| Cost of risk[13] | 1.7 | 3.2 |
| Book value per share | 27.7 | 24.5 |
Nnamdi Okonkwo, the Group Managing Director while commenting on the results stated that: “FBNHoldings continues to make good progress in transforming the enterprise despite the uncertain and complex operating environment, leveraging the execution capabilities of top talents across the Group to generate sustainable value for all our stakeholders.
In 2022, we grew net interest income by 59.2% y-o-y to N363.2 billion which ultimately delivered a robust profit before tax of N157.7 billion from the ordinary business of the Group. As a reaffirmation of our commitment to drive revenue and profitability leveraging on the strengthened balance sheet, loans, and advances grew 31.5% y-o-y to ₦3.8 trillion and total assets 18.4% y-o-y to ₦10.6 trillion, while our investments in technology and strong transactional and digital banking capabilities continue to support non-interest income generation.
In line with our strategic priorities, we are driving further revenue and profitability growth through a carefully evaluated delivery model of service offerings, with a focus on owning the customer journey while deepening our unique value proposition across markets. We are reimagining our digital client acquisition and product offerings and accelerating next-generation capabilities to exceed the current requirements of existing and potential customers. In addition, we remain committed to enhancing our operational efficiency with a focus on optimising processes through technology and digital platform delivery while ensuring its availability and stability.
Finally, we see endless possibilities ahead, as we keep defining frontiers of financial services, optimising the depth and breadth of our unique portfolio of businesses to unlock the full potential of FBNH.”
Group Financial Review
Gross earnings grew by 6.3% to ₦805.1 billion (Dec 2021: ₦757.3billion). This was driven by strong growth in interest income (+49.6% y-o-y) to N551.9 billion (Dec 2021: N369.0 billion). The increase in interest income benefited primarily from 31.5% y-o-y growth in loans to customers. This was further supported by the higher interest rate environment, which positively impacted yields. On the other hand, interest expense growth of 34.0% y-o-y to N188.7 billion (Dec 2021: N140.8 billion), was contained following strategic growth in deposit mobilisation and funding at optimised rates. As a result, net interest income improved impressively by 59.2% y-o-y to N363.2 billion (Dec 2021: N228.2 billion).
We remain focused on optimising non-interest revenue across the business. In line with this, fees and commission income grew 2.4% y-o-y to N144.0 billion (Dec 2021: N140.6 billion), increasing largely from higher number of transactions. Further, fees from electronic banking supported non-interest revenue despite proliferation of fintech and competition in the industry. Overall, the contribution of non-interest income to net revenue remains steady.
In 2022, we were faced with varying macroeconomic challenges including high inflation and currency depreciation, the effect of which contributed to the 9.0% y-o-y increase in operating expenses to ₦364.1 billion (Dec 2021: ₦334.2 billion). Despite these challenges, the Group maintained operating expenses growth well below the year-end inflation rate of 21.3%. Despite the macro pressures, operating income remains robust at N590.4 billion (Dec 2021: ₦592.6 billion), resulting in cost to income ratio of 61.7%. Going forward, we remain focused on further improving efficiency.
Deposit from customers increased by 21.8% y-o-y to ₦7.1 trillion (Dec 2021: ₦5.8 trillion), further reinforcing the robust funding base. Deposits grew across all the lines, primarily along the low-cost segments. As a result, current and savings account now represent 91.9% of total deposits[14] (Dec 2021:91.2%). The deposit base remains well diversified, driven by the rich retail franchise, thereby providing a stable core deposit base and enhancing our strong liquidity position. The Group sustained its customer acquisition drive, and enhanced financial inclusion through the increasing Agent banking network, while increasing customer deposit funding stability through various digital platforms. In view of this and despite the increasing rate environment, cost of the fund increased only marginally to close at 2.3% (Dec 2021: 2.1%). The Group continues to enjoy strong brand recognition and market access providing robust funding opportunities.
Total assets grew 18.4% y-o-y to ₦10.6 trillion (Dec 2021: ₦8.9 trillion) driven by a 31.5% y-o-y increase in net customer loans and an 18.6% y-o-y increase in investment securities. Demonstrating improving earning asset position, cash, and balances with central Banks, loans to banks & customers, and investment securities constitute now 88.9% of total assets versus 87.2% in the prior year.
The Group’s transformed risk management architecture continues to support the sustainable improvement in overall earnings. This has been demonstrated by the continuously improving asset quality metrics, despite the peculiar challenges across different markets. Specifically, the non-performing loan ratio further declined to 4.3% (Dec 2021: 6.1%), within the regulatory benchmark of 5%, while coverage ratio further improved to 86.6% (Dec 2021: 62.2%). Similarly, cost of risk dropped to 1.7% (Dec 2021: 3.2%).
The strengthened balance sheet provides a solid platform for resilient and sustainable earnings generation to support capital. On the back of this, our banking subsidiaries continue to maintain a disciplined approach to capital management supported by improving coverage ratios. As such, all entities maintain capital in compliance with regulatory guidance.
Business Groups:
Commercial Banking
- Gross earnings of ₦748.6 billion, up 4.4% y-o-y (Dec 2021: ₦716.8 billion)
- Net interest income of ₦357.2 billion, up 58.3% y-o-y (Dec 2021: ₦225.7 billion)
- Non-interest income of ₦198.5 billion, down 42.0% y-o-y (Dec 2021: ₦342.2 billion)
- Operating expenses of ₦341.9 billion, up 8.9% y-o-y (Dec 2021: ₦313.9 billion)
- Profit before tax of ₦147.0 billion, up 12.4% y-o-y (Dec 2021: ₦130.9 billion)
- Profit after tax of ₦129.4 billion, up 9.8% y-o-y (Dec 2021: ₦117.8 billion)
- Total assets of ₦10.1 trillion, up 18.1% y-o-y (Dec 2021: ₦8.5 trillion)
- Customers’ loans and advances (net) of ₦3.7 trillion, up 30.5% y-o-y (Dec 2021: ₦2.8 trillion)
- Customers’ deposits of ₦6.9 trillion, up 22.4% y-o-y (Dec 2021: ₦5.6 trillion)
Commenting on the results, Dr. Adesola Adeduntan, Chief Executive Officer of FirstBank (Commercial Banking Group) said:
“The Commercial Banking Group continued the strong performance trajectory from the 2021 results posting another set of robust results for FY 2022 with gross earnings up 4.4% year-on-year to N748.6 billion and profit before tax of N147 billion, recording a growth of 12.4% year-on-year. Total assets grew by 18.1% year-on-year to N10.1 trillion despite the unprecedented macroeconomic challenges and dynamic regulatory environment. The impressive growth in PBT was driven by a 58.3% year-on-year growth in interest income from N255.7 billion to N357.2 billion arising from business growth and improved optimisation of our balance sheet. This is in keeping with our Quantum Profitability Leap agenda.
As a Group, we continue to reap the benefits of our investments in technology, transaction, and digital banking capabilities which enable us to offer better customer experiences to our numerous clients. This was further reflected in the impressive 22.4% and 28.5% year-on-year growth in customers’ deposits and loans respectively, demonstrating customers’ confidence in our service delivery and value proposition.
In the face of the increasingly competitive landscape, we are continually looking into the future to build an enduring and sustainable institution. We remain focused on the disciplined execution of our strategic initiatives aimed at positioning the Group for improved profitability, facilitating performance excellence, and exceeding the expectations of all our stakeholders.”
Merchant Banking & Asset Management (MBAM) / FBNQuest
The FBNQuest group delivered a solid performance in 2022 despite the challenging macroeconomic and operating environment.
The group recorded 42.2% year-on-year growth in profit-before-tax to close at a four-year high of N13.9 billion. The performance was underpinned by a 25.4% increase in gross earnings to N53.1 billion, and the successful implementation of cost optimisation initiatives saw operating expenses drop by 2.7% despite inflationary pressures. We continue to make progress growing non-interest annuity type income, with non-interest income representing 82.8% of net revenues, growing by 13.9% y-o-y. We also made progress in growing Net interest income by 27.0%, despite the rising cost of funds and increasing regulatory charges.
The FBNQuest group’s total assets increased by 28.5% to N495.4 billion, and the group remains well capitalised with Shareholders’ Funds of N63.3 billion. The Merchant Bank’s Capital Adequacy Ratio (CAR) stood comfortably above the regulatory requirement of 10%, at 16.3%.
The Investment Management Division continues to be a major driver of our success, increasing its contribution to top-line revenues to 36.2% in 2022 from 30.2% in 2021. Our Alternative Investment business delivered a particularly strong performance following the business’ profitable exit from one of its portfolio companies that were carefully nurtured over the years. The Asset Management business delivered a 28.3% increase in revenues compared to 2021, while the Trustees business continues to generate stable revenues.
Despite the challenging environment for growing risk assets, the Corporate and Investment Banking (CIB) Division performed well, contributing 30.4% to top-line revenues. The division remained top of mind for clients, as we participated in several capital markets transactions and closed a major syndicated facility in the oil and gas sector during the year.
The Institutional Securities Division contributed 33.4% to top-line revenues. The Fixed Income, Currencies, and Treasury business continue to be a major driver with 35.6% of divisional top-line revenue, whilst the Equity brokerage business has grown by 48.8%.
As we look ahead to 2023, we will remain focused on the effective execution of our strategic objectives to purposely accelerate revenue growth, provide an enabling environment for our people to excel, intensify our efforts to enhance the client experience across all our channels, and deliver value to our shareholders.
