Of FBNH Numbers and Tables: The Trend of Cost and Profitability

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Saturday, September 25, 2021 05:30 AM / by Proshare Research/ Header Image Credit: EcoGraphics


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Joint income statements over five years for the ten largest local banks suggest that FBN's performance remains mixed.

 

Gross Earnings

Gross earnings have in the last four years fallen marginally. In 2016, the bank's top line had amounted to N581.83bn. In the following year, earnings rose to N595.44bn this was despite a fall in total loans and advances from N2.08bn in 2016 to N2bn in 2017. In 2019, gross earnings reached N627.01bn growing by +6.74% year-on-year (Y-o-Y). FBNH reported a gross earning of N291.2bn in H1 2021 (see chart 6 below).

 

 

 

Chart 6: FBNH's Gross Earnings 2016 - H1 2021 (N'm)

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Source: FBNH, Proshare Research

 

Net Interest Income

Net Interest Income at FBNH has consistently declined, with the results from 2017 and 2019 being slight deviations from the trend. Between 2016 and 2020, Net Interest Income fell by -17.3% from N3o4bn in 2016 to N251bn in 2020.   This implies that the difference between the bank's revenue generated from interest-bearing assets and the expenses associated with the payments on interest-bearing liabilities is thinning out. This can be attributed to the quality of the loan portfolio as well as the different and overall interest rates charged. Likewise, the steady rise in Net Interest Income at FBNH is indicative of the fact that the bank has not managed its interest rate risk as efficiently as it should (see Chart 7 below).

 

Chart 7: FBNH's Net Interest Income 2016 - H1 2021 (N'm)

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Source: FBNH, Proshare Research

 

Non-Interest Income

Non-Interest Income at FBNH has continued to rise since 2017. Take, for instance, in 2017, the bank's non-interest income was N113.7bn; by 2018, it had increased by +15.83% to settle at N131.7bn. It, however, would later spiral by +26.68% to N174.7bn in 2020 from N137.9bn in 2019. The rise in Non-Interest Income taken along with the consistent drop in Net Interest Income further supports the idea that FBNH appears to increase its reliance on service fees to buffer earnings. As of H1 2021, Non-Interest Income was N118.7bn, close to 70% of the entire amount recorded as non-interest income in 2020 (see chart 8 below).

 

Chart 8: FBNH's Non-Interest Income 2016 - H1 2021 (N'm)

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Source: FBNH, Proshare Research

 

Net Operating Income

As observed with Gross earnings and Net Interest Income, FBNH's Net Operating Income (NOI) also shuffled along a downward drift in the five years to 2020. In 2016, the bank reported a Net operating Income of N249bn, following which NOI dropped by -17.87% to reach N204bn in 2017. Similarly, between 2018 and 2020, the bank recorded a 12.08% decline in NOI. At the half-year mark in 2021, FBNH had recorded N69.9bn. The fall in operating income represented a reduction of -3.1% compared to the same period of 2020 (see chart 9 below).

 

Chart 9: FBNH's Net Operating Income 2016 - H1 2021 (N'm)

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Source: FBNH, Proshare Research

 

Profit Before Tax

Profit Before Tax (PBT) has risen steadily in the last five years. In 2016, the Bank recorded a PBT of N22.95bn; in the following year, FBNH's PBT appreciated by +147.62% to settle at N56.82bn, between 2018 and 2019 saw a similar rise in PBT when it rose by +30.9% from N63.85bn to N83.6bn. The fact that 2020 was plagued by a major public health crisis that affected the bank's operating environment meant that a PBT of N83.70bn was a decent performance. However, the H1 2021 result shows a PBT of N45.24bn; this represents only a +9.23% increase from H1 2020 figures despite the full resumption of economic activities (see chart 10 below).

 

Chart 10: FBNH's Profit Before Tax 2016 - H1 2021 (N'm)

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Source: FBNH, Proshare Research


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Downloadable Versions of 100 Days After CBN's Board Removal: First Bank's Shaky House of Cards Report (PDF)

1.      Executive Summary: 100 Days After CBN's Board Removal: First Bank's Shaky House of Cards -  September 19, 2021

2.     Full Report: 100 Days After CBN's Board Removal: First Bank's Shaky House of Cards  -  September 19, 2021


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Related Articles/References

1.    Of First Bank and Bad Debtors; A System's Throbbing Headache - Apr 30, 2021 - Proshare Editorial

2.  CBN Removes Boards of First Bank of Nigeria, FBN Holdings; Appoints New Chairmen - Apr 29, 2021 - Proshare News

3.   Analyzing the H1 2017 Performance of FBNHoldings Plc - A Comprehensive Report/Review on the Company - Oct 23, 2017, Proshare Research

4.   FBNHoldings Plc Q1'2017 Performance Assessment Report Updated - Sep 25, 2017, Proshare Research

5.   Bank NPLs (23) - The Case for a New Approach - Jun 07, 2020 - Debtors Africa

6.  W. Chan Kim and Renee Mauborgne (2004) "Blue Ocean Strategy" 

7.  Board Governance: A Thin Line Between Oversight and Operations - Sep 28, 2020 - IoD Centre for Corporate Governance

8. Leadership, Change and Corporate Transformation - The Nigerian Experience  Nov 07, 2017, Olufemi AWOYEMI - Proshare

9.   CEO Remuneration 2021 Report: From COVID to Collaboration - Aug 01, 2021, Proshare Research

10. Memo to the Market - The NSE, Oscar Onyema Foundation and Corporate Governance - Aug 20, 2018, Olufemi Awoyemi, Proshare

11.   FBN Holdings Plc - IR Page on Proshare Markets - Proshare Research

12.  Annual Accounts - IR Page in Proshare - Proshare Research

13.  Bernard Longe wins suit against First Bank Plc, Supreme Court decides today - Mar 05, 2010, Proshare



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