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FBNHoldings Plc Q1’ 2017 Performance Assessment Report Updated

Proshare

Monday, September 25, 2017 11:00AM / Proshare Research

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Beyond News, Data Analysis and Validation are paramount when making investment choices. Understanding this, Proshare continues to ensure that credible and reliable information backed by verified data are available for investors to make intelligent decisions.

Following the public release of our Q1’ 2017 Performance Assessment Report on FBN Holdings Plc on August 9, 2017, we have since obtained feedback from the investing community and the bank, after which factual changes have been made in the report; specifically on pages 5 – 7, 12, 18, 19, 23 – 25, 28 & 32.

Key Highlights of the report are as follows:


Capital Adequacy

·         The capital adequacy ratio rose from 17.2% in Q4 2016 t0 17.8% in Q1 2017

·         The tier 1 capital ratio rose from 13.3% in 2015 to 14.7% in 2016

·         The gearing ratio rose from 54.4% in Q4 2016 to 64.6% in Q1 2017

Risk Analysis

·         The NPL ratio rose from 24.4% in Q4 2016 to 26.0% in Q1 2017

·         The risk asset ratio rose from 53.3% in Q4 2016 to 53.3% in Q1 2017

·         The cost of risk of the FBNHoldings fell from 10.4% in 2016 t0 4.8% in Q1 2017

·         Loans to Deposits Ratio rose from 77.1% in Q4 2016 to 77.8% in Q1 2017

·         The debt to capital ratio rose from 35.2% in Q4 2016 to 39.3% in Q1 2017

·         The Group’s earning yield rose from 11.3% in Q4 2016 to 14.1% in Q1 2017

Income Statement Analysis

·         Operating margin profit rose from 3.9% in Q4 2016 to 14.2% in Q1 2o17

·         Return on equity rose from 3.0% in Q4 2016 to 10.9% in Q1 2017

·         The return on asset rose from 0.4% in Q4 2016 to 1.3% in Q1 2017

·         The cost of funds rose from 2.8% in Q4 2016 t0 3.4% in Q1 2017

·         The net interest margin fell from 8.8% in Q4 2016 to 8.3% in Q1 2017

·         The cost to income ratio rose from 47.0% in Q4 2016 to 53.3% in Q1 2017

·         The average cost to deposit rose from 2.5% in Q4 2016 to 3.2% in Q1 2017


Market Positioning

·         FBNH has a book value of N602billion, making it the 2nd largest bank

·         FBNH has 3rd highest number of business locations in country, with 875 business locations

·         The bank generated the 2nd largest total income (comprises of Net Interest Income, Net Fee and Commission, Trading Income, Other Income) in the banking industry

·         FBNH has the 6th largest Market CAP in the banking industry

·         FBNH has the second largest depositors’ base in the industry (Mar-17)

·         The bank’s share price has fallen by 57% over the last three years


Measures taken by the management

·         More aggressive loan recovery

·         Enhanced asset optimization strategy

·       Implementation of a robust ERM (Enterprise Risk Management) and ERP (Enterprise Resource Planning) solution to improve risk management and operational efficiency as well as enhance the fraud and control environment

·         Restructure the risk management approach and has new management in place

We encourage you our readers and subscribers to stay connected for the H1’2017 edition of the report to be released in October 2017. The report will also include insights on other banks especially those listed on the Nigerian Stock Exchange. We encourage you to continue to share your feedback with us so we can better serve you.


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