First Bank reports gross earnings of N293.3bn

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FBN Holdings Plc. (“FBNH” or “FBNHoldings” or the “Group”) today announces its unaudited results for the six months ended 30 June 2018.

Income Statement
Gross earnings of N293.3 billion, up 1.6% year-on-year (y-o-y) (Jun 2017: N288.8 billion)
Net-interest income of N149.6 billion, down 8.8% y-o-y (Jun 2017: N164.1 billion)
Non-interest income of N61.3 billion, up 21.4% y-o-y (Jun 2017: N50.5 billion)
Operating income of N210.9 billion, down 1.6% y-o-y (Jun 2017: N214.4 billion)
Impairment charge for credit losses of N52.8 billion, down 15.4% y-o-y (Jun 2017: N62.4 billion)
Operating expenses of N119.3 billion, up 2.3% y-o-y (Jun 2017: N116.6 billion)
Profit before tax of N38.9 billion, up 9.1% y-o-y (Jun 2017: N35.6 billion)
Profit after tax N33.5 billion, up 13.7% y-o-y (Jun 2017: N29.5 billion)

Statement of Financial Position
Total assets of N5.3 trillion, up 1.3% year-to-date (y-t-d) (Dec 2017: N5.2 trillion)
Customer deposits of N3.3 trillion, up 4.1% y-t-d (Dec 2017: N3.1 trillion)
Customer loans and advances (net) of N1.9 trillion, down 7.1% y-t-d (Dec 2017: N2.0 trillion)

Key Ratios
Post-tax return on average equity of 10.0% (Jun 2017: 9.9%)1, 2
Post-tax return on average assets of 1.3% (Jun 2017: 1.2%)
Net-interest margin of 7.1% (Jun 2017: 8.5%)
Cost to income ratio of 56.5% (Jun 2017: 54.4%)
NPL ratio of 20.8% (Jun 2017: 22.0%)
55.0% liquidity ratio (FirstBank (Nigeria)) (Jun 2017: 50.4%; Dec 2017: 51.1%)
18.1% Basel 2 capital adequacy ratio (FirstBank (Nigeria)) (Jun 2017: 17.6%, Dec 2017: 17.7%)
12.6% Basel 2 CAR (FBNQuest Merchant Bank) (Jun 2017: 26.7%, Dec 2017: 15.7%)

Notable Developments
FirstBank indicated its intention to call the 8.25% US$300million FBN Finance Company B.V. Subordinated callable note due in 2020
FirstBank opened a digital laboratory as part of its strategy to drive innovation in the digital banking space
FirstBank commissions a strong initiative to implement enterprise-wide Customer Relationship Management solution to drive service excellence and improve customer experience

Selected Financial Summary
Income statement

(Nbillion)
H1
2018
H1
2017
∆%

Key Ratios %
H1
2018
H1
2017
Gross earnings
293.3
288.8
1.6

Post-tax return on average equity3
10.0
9.9
Interest income
225.4
232.4
-3.0

Post-tax return on average assets4
1.3
1.2
Net-interest income
149.6
164.1
-8.8

Earnings yield5
10.7
12.1
Non-interest income6
61.3
50.5
21.4

Net-interest margin7
7.1
8.5
Operating Income8
210.9
214.4
-1.6

Cost of funds9
3.5
3.5
Impairment charge for credit losses
52.8
62.4
-15.4

Cost to income10
56.5
54.4
Operating expenses
119.3
116.6
2.3

Gross loans to deposits
67.0
74.5
Profit before tax
38.9
35.6
9.1

Liquidity (FirstBank(Nigeria))
55.0
50.4
Profit after tax
33.5
29.5
13.7

Capital adequacy (FirstBank (Nigeria))11
18.1
17.6
Basic EPS (kobo)12
187
164
13.7

Capital adequacy
(FBN Merchant Bank)11
12.6
26.7
Statement of Financial Position

NPL/Gross Loans
20.8
22.0
(Nbillion)
H1
2018
FY
2017
∆%

NPL coverage13
82.3
52.7
Total assets
5,306.5
5,236.5
1.3

PPOP14/impairment charge (times)
1.7
1.6
Customer loans & advances (Net)
1,858.2
2,001.2
-7.1

Cost of risk15
4.7
5.4
Customer deposits
3,270.7
3,143.3
4.1

Leverage (times)16
8.1
8.0
Non-performing loans
455.8
520.0
-12.4

BVPS17
18.4
17.0
Shareholders’ funds
660.2
678.2
-2.7

Commenting on the results, UK Eke, the Group Managing Director said:

“FBNHoldings continues to make steady progress towards delivering on its strategic targets. This has been demonstrated with a 13.7% y-o-y increase in profit after tax, 21.4% y-o-y growth in non-interest and 15.4% y-o-y decline in impairment charge. Clearly, the Group is on its way to delivering its promises on asset quality, enhancing revenue generating capacity through non-interest income and driving further efficiencies.”

As we ramp up initiatives to grow interest income, we remain focused on the implementation of key initiatives across our subsidiaries and further strengthen our businesses towards delivering sustainable performance as well as optimising returns to our shareholders.”

Business Groups18 19 20:

Commercial Banking
Gross earnings of N264.7 billion, up 1.4% y-o-y (Jun 2017: N261.0 billion)
Net interest income of N140.8 billion, down 9.8% y-o-y (Jun 2017: N156.0 billion)
Non-interest income of N49.6 billion, up 28.5% y-o-y (Jun 2017: N38.6 billion)
Operating expenses of N105.3 billion, up 0.9% y-o-y (Jun 2017: N104.4 billion)
Profit before tax of N32.3 billion, up 16.2% y-o-y (Jun 2017: N27.8 billion)
Profit after tax of N28.3 billion, up 22.7% y-o-y (Jun 2017: N23.0 billion)
Total assets of N5.1 trillion, up 0.9% y-t-d (Dec 2017: N5.0 trillion)
Customers’ loans and advances (net) of N1.9 trillion, down 7.2% y-t-d (Dec 2017: N2.0 trillion)
Customers’ deposits of N3.2 trillion, up 3.5% y-t-d (Dec 2017: N3.1 trillion)

The Commercial Banking business contributed 90.2% (Jun 2017: 90.3%) to the Group’s gross earnings and 84.0% (Jun 2017: 78.3%) to the Group’s profit before tax.

Commenting on the results Dr. Adesola Adeduntan, the MD/CEO of FirstBank and its Subsidiaries said:

“The Commercial Banking Group reported a relatively strong set of results and I am pleased to report consistent improvement towards our strategic objectives. This is reflected in a strong 28.5% y-o-y increase in non-interest income, 15.5% y-o-y reduction in the impairment charge and a marginal increase of 0.9% y-o-y in operating expenses, despite the high inflationary environment. It is clear that our efforts to enhance our revenue generating capabilities, strengthen the risk management and control environment as well as to optimise efficiencies within our business are paying off.”

“We remain focused on maximizing the potential of our business, innovating to expand access to new markets and increasing the contribution of our international subsidiaries, using technology as a key enabler. We expect further improvements in the coming periods, from growth in the quality and yields of the loan book to enhanced remediation efforts, service delivery excellence and the risk and control environment. I am confident in the capacity of our business to deliver the expected results.”
Merchant Banking & Asset Management (MBAM) / FBNQuest
Gross earnings of N18.5 billion, down 2.8% y-o-y (Jun 2017: N19.0 billion)
Profit before tax of N3.7 billion, down 38.1% y-o-y (Jun 2017: N6.0 billion)
Total assets of N220.8 billion, up 1.8% y-t-d (Dec 2017: N216.9 billion)

The Merchant Banking and Asset Management business contributed 6.3% (Jun 2017: 6.6%) to the Group’s gross earnings and 11.1% (Jun 2017: 17.5%) to the Group’s profit before tax.

Insurance
Gross earnings of N10.1 billion, up 24.6% y-o-y (Jun 2017: N8.1 billion)
Profit before tax of N3.4 billion, up 43.6% y-o-y (Jun 2017: N2.4 billion)
Total assets of N63.8 billion, up 25.0% y-t-d (Dec 2017: N51.1 billion)

The insurance business contributed 3.2% (Jun 2017: 2.8%) to gross earnings of the Group and 7.4% (Jun 2017: 6.5%) to profit before tax.

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