FBN Holdings Plc: An Attractive Bait?


Friday, August 25, 2017 10:00AM / Proshare Research  

The performance of FBNH on the Nigerian bourse in recent times has been very impressive considering the lacklustre performance the stock recorded in 2015 financial calendar due to its loan exposure in the oil & gas sector and deterioration in its asset quality. 

The bank ended the FY15 calendar with an NPL ratio of 15.4%, NPL cover of 39.5%, 46% of loans being FX denominated and a capital adequacy ratio of 17.2% which is only 210bp above the regulatory minimum requirements. 

Considering its latest performance, its NPL ratio continued to climb as it went up from 15.4% in FY 2015 to 24.4% in FY 2016 and 26% in Q1 2017. This simply suggests that the bank has not been very effective in terms of loan recovery.

However, the bank’s capital adequacy ratio continued to improve from what it recorded in FY 2015. It improved to 17.9% in FY 2016 and 17.8% in Q1 2017, while its capitalized earnings for the full year provide enough buffers to help maintain capital adequacy ratio above the 15% regulatory requirements.

In the last three years, FBNH’s share price has fallen drastically in the last three years shedding about 57% in value. In contrast, the NSE Index and Banking Index had fallen by 21% and 12%, respectively.  

However, analysis on the 2017 YTD price performance of FBNH revealed that the stock has recorded 73% gain as at July 31st, 2017.

Also, FBNH has been improving its Tier 1 capital position as it increased from 12.2% in FY 2014 to 14.3% in FY 2016. 

However, it is the lowest amongst Tier 1 banks with ETI (23.4%), ACCESS (15.6%), GUARANTY (21.7%), ZENITHBANK (21.6%) and UBA (16.1%).

For more details on Banking Sector Performance, kindly download our FBN Holdings Plc Comprehensive Performance Assessment Report

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