Business
FBN Holdings Reports Impressive 128% YoY Growth in Pre-Tax Profits Amid Economic Challenges
FBN Holdings Reports Impressive 128% YoY Growth in Pre-Tax Profits Amid Economic Challenges
FBN Holdings, Nigeria’s oldest financial institution, has released its third-quarter results for 2024, showcasing a remarkable pre-tax profit of N198.871 billion, which translates to an impressive 216.50% year-on-year growth. When combined with the first half of the year, the bank has achieved a staggering pre-tax profit of N610.861 billion over nine months, marking a robust 128% increase compared to the same period last year.
Despite navigating a challenging economic landscape, FBN Holdings has effectively leveraged strong interest income and non-interest earnings to significantly boost its profits. However, the bank has not been without its challenges, facing rising operating expenses and currency volatility that have posed material headwinds.
Key Highlights from Q3 2024
- Interest Income: N685.316 billion (+178.61% YoY)
- Interest Expense: N326.310 billion (+208.28% YoY)
- Net Interest Income: N359.006 billion (+156.19% YoY)
- Impairment Charge for Losses: N78.401 billion (+222.31% YoY)
- Profit After Tax: N166.014 billion (+245.67% YoY)
- Loans and Advances to Customers: N9.366 trillion (+47.27%)
- Total Assets: N27.493 trillion (+63.32%)
Profitability and Operational Efficiency
The bank’s net interest income increased by 156% in the third quarter to N359 billion, and by 133% over the course of nine months to N873.9 billion. FBN Holdings has benefited from favorable lending conditions and rising interest rates, with interest income jumping to N1.63 trillion for the nine-month period, up 165% from the previous year.
However, the rise in interest expenses to N326.3 billion in Q3, a 208% increase year-on-year, reflects the high cost of funding prevalent in Nigeria’s current economic climate. This underscores the challenges the bank faces in maintaining net margins amid escalating costs.
Strong Asset Growth and Customer Deposits
FBN Holdings has also reported substantial growth in customer deposits, which climbed to N16.724 trillion, a significant increase from N10.7 trillion at the end of 2023. The surge in domiciliary deposits, now at N5.36 trillion, indicates a growing trend of dollarization among customers in response to exchange rate volatility.
The loan portfolio saw an impressive rise to N9.37 trillion, with notable increases in overdraft balances and term loans, reflecting the bank’s strategic focus on flexible credit offerings.
Future Outlook: Recapitalization Plans
The bank’s impressive results position it well as it embarks on a planned N350 billion rights issue. FBN Holdings aims to raise N150 billion by offering shares at N25 each, with the share price currently trading at N27.1. This strategic move will bolster its capital base, enabling further expansion and investment.
In conclusion, FBN Holdings’ robust financial performance amidst economic challenges demonstrates its resilience and strategic focus. As it continues to navigate the complexities of the Nigerian financial landscape, its commitment to innovation and customer-centric solutions will be key to sustaining its growth trajectory.
