FBN Holdings strengthened its profit performance at the end of half year operations in June 2018, showing improved prospects for sustaining recovery for the second year .
The bank’s position has shifted from a profit decline in the first quarter to a year-on-year growth at the end of the first half. That has placed it in a position to build profit further this year after a 233% rebound in 2017.
Revenue performance remains generally weak but there is an improvement from a slight decline in gross earnings in the first quarter to a marginal improvement at half year. The bank closed the period with gross earnings of N294.57 billion, an improvement of 1.5% year-on-year. It closed last year with gross earnings of about N598 billion – a marginal improvement of 2.7% and the least revenue growth record in many years.
Interest income – the main revenue line of the bank continues to decline at 3% to N225 billion at the end of June. This seems to reflect a sustaining decline in the bank’s net loans and advances to customers. At about N1.86 trillion at the end of June, loans and advances to customers have declined further from N1.9 trillion at the end of the first quarter. It is also a continuing decline from the peak of N2.08 trillion in December 2016.
Loans and advances to banks have however continued to grow at 15% to over N857 billion over the same period. Restructuring the credit portfolio seems to have been warranted by the massive credit losses the bank has been experiencing since 2014.
An increase of 19.4% in non-interest income countered the decline in interest earnings and permitted the marginal gain in revenue during the review period. Top revenue drivers for the bank include net gains on investment securities, which rose from a loss position in the same period last year to over N5 billion at the end of June. Also net gain on foreign exchange rose by 158% to about N13 billion over the same period.
Against the decline in interest income, interest expenses grew by 11% year-on-year to N75.76 billion at the end of June 2018. That caused a drop of about 9% in net interest income to N149.64 billion. Customer deposits grew far below the increase in interest expenses at 4% and deposits from banks by 3% – indicating a significant increase in the average cost of funds for the bank.
With slow growth […]