FBN Holdings Q1 profit hits decade high on rising interest income

Profits at FBN Holdings, the parent company of Nigeria’s oldest bank, First Bank increased by 54.4 per cent growth to N50.09 billion, hitting a decade high, analysis showed.

The financial services group reached the revenue milestone riding on the wave of higher interest rates in Nigeria, which have risen 650 basis points to 18.5 per cent since May 2022, enabling lenders to charge more for loans.

Interest income, which often accounts for the lion’s share of lenders’ revenues, surged by 64 per cent growth to N179.61 billion, driven mainly by loans and advances to customers at N119.41 billion, investment securities at N48.93 billion and loans and advances to banks at N11.27 billion.

FBN Holdings’ net interest income hit a decade high to N111.85 billion in the first quarter of 2023, a 53.6 per cent increase from N72.8 billion recorded in the first quarter of 2022.

Consequently, the holding company saw its interest expense grow 84.9 percent to N67.76 billion on the back of N46.6 billion expense on deposits from customers, deposit from banks expense which stood at N14.50 billion, borrowings and others at N6.67 billion in March 2023.

FBN Holdings’ revenue from external customers arrived at N259.51 billion which comprised commercial banking business group (N245.51 billion), merchant banking and asset management business group (N13.08 billion) and others (N918 million) for the period ended March 2023.

Commenting on the result,  Chief Executive Officer of First Bank of Nigeria,Adesola Adeduntan said, “This year marks our 129th anniversary, and these results clearly demonstrate the resilience of our business model and proven ability to transform ourselves to meet the demands of changing times and seasons.”

“We are optimistic about the rest of 2023 and these results are a sign of better things to come.”

The holding company received N42.87 billion fee and commission income while N7.57 billion was incurred as fee and commission expense in the first quarter of 2023.

Net fee and commission income stood at N35.30 billion in the first quarter of 2023, 29.2 per cent increase from N27.32 billion in the first quarter of 2022.

However, foreign exchange income dropped 47.3 per cent to N3.03 billion from N5.75 billion in the period reviewed.

Net gains on sale of investment securities amounted to N33.28 billion in the first quarter of 2023, a 128 per cent growth from N14.59 billion in the similar period of 2022.

Dividend income grew 54.8 per cent to N130 million in the first quarter of 2023 from N84 million in the first quarter of 2022. Other operating income increased by 21.1 per cent to N2.64 billion in the first quarter of 2023 from N2.18 billion in the first quarter of 2022.

Furthermore, the analysis of the cash flows of the holding company reveals net cash flow generated from operating activities amounted to N365.69 billion in March 2023, up 34 per cent from N272.95 billion in March 2022.

Net cash flow used in investing activities stood at N1.04 trillion, 563 per cent increase from N156.82 billion in the period reviewed.

Net cash flow used in financing activities increased to N45.54 billion in the first quarter of 2023, up 36.2 per cent from N33.44 billion in the first quarter of 2022.

Cash and cash equivalents rose to N1.23 trillion in the first quarter of 2023, 23 per cent decline from N1.6 trillion in the first quarter of 2022.