FBN Holdings’ half-year profit jumps threefold on gains from financial instruments

FBN Holdings built a more than threefold surge in net profit for the first half of the year on an unusual boost in gains from financial instruments.

The financial services group recorded the gains at a time other lenders are leveraging spikes in interest rates to drive profits and growth.

Details of its earnings report issued on Thursday showed that the group posted a net profit of N187.2 billion, compared to N56.6 billion a year ago.

Adesola Adeduntan, CEO of the group’s flagship division First Bank, described the feat as “the strongest financial performance in the almost 130 years of the Bank’s history,” in a separate document seen by PREMIUM TIMES.

Interest income accounted for more than 58 per cent of revenue, but gains from financial instruments significantly impacted profitability, given that bulk of the latter was eroded by galloping costs.

Gains from financial instruments at fair value through profit and loss climbed twenty times over to N229.7 billion, helping to soften the blow of foreign exchange losses.

Interest income accelerated 69.3 per cent to N383.3 billion, riding on the whirlwind of interest rate hikes in corporate Nigeria, which has helped other lenders post record profits.

FBN Holdings, which runs seven subsidiaries spanning investment banking, trusteeship, insurance brokerage, merchant banking and asset management, among others, relies on its commercial banking unit FirstBank for roughly 93 per cent of its revenue.

The group operates in 825 business locations in ten markets within and outside Africa.

FBN Holdings put aside N57.6 billion to cover a potential loss from credit whose chances of repayment have been weakened by perennial defaults, 165.4 per cent higher than the figure for last year.

A significant pressure point was operating expenses which rose to N151.7 billion from N116.8 billion due to surges in regulatory costs and promotional expenses.

Non-performing loans as a percentage of gross loans slid to 4.3 per cent from 5.4 per cent a year ago, while total assets jumped by more than a third to N14.2 trillion.

“We continue to focus on customer-centric innovations with strong transactional and digital capabilities supported by sound risk management practises to anticipate and creatively deliver products and services that delight the different customer segments that we serve,” Group CEO Nnamdi Okonkwo said in the earnings report document.

FBN Holdings has returned 65.6 per cent this year and closed with a price-to-earnings ratio of 4.3x on Thursday before the earnings report was released.