FBN Holdings half year confirms fears as NPL ratio hits 22%

First Bank of Nigeria (FBN) Holdings Plc is at the brink of a major credit crisis as its Non Performing Loans (NPLs) hit 22 per cent in half year ended June 30, 2016 from 4.1 per cent recorded in half year of 2015.

Apex banking regulating body, Central Bank of Nigeria (CBN) had pegged NPL ratio threshold at five per cent as banks operating in Nigeria continued to suffer effect of global dwindling oil prices, among other macro economy.

The group non-performing loans significantly rose by 509 per cent from N87.4 billion recorded in H1 2015 to N531.7 in H1 2016.

Key Ratio:

• NPL ratio of 22.8 per cent (Jun 2015: 4.1 per cent)
• ROAE of 12.0 per cent (Jun 2015: 14.8 per cent)
• ROAA of 1.6 per cent (Jun 2015: 1.8per cent)
• Net-interest margin of 7.2 per cent (Jun 2015: 7.8 per cent)
• Cost to income ratio of 47.4 per cent (Jun 2015: 61.6per cent)

Income statement

• Gross earnings of N267.9 billion, marginally lower by 1.2 per cent (June 2015: N271.3 billion)
• Net-interest income of N126.1 billion, down five per cent (June 2015: N132.7 billion)
• Non-interest income of N94.1 billion, up 52 per cent (June 2015: N61.91 billion)
• Operating income of N220.1 billion, up 13.1 per cent (June 2015: N194.61 billion)
• Impairment charge for credit losses of N69.9 billion (June 2015: N22.6 billion)
• Opex of N104.3 billion, down 13per cent (June 2015: N119.91 billion)
• Profit before tax of N45.9 billion, down 11.9 per cent (June 2015: N52.1 billion)
• Profit after tax N35.9 billion, down 10.5 per cent (Jun 2015: N40.1 billion

Commenting on the results, the Group Managing Director, UK Eke, said, “FBN Holdings’ performance has remained resilient in the challenging macroeconomic and business environment, further exacerbated by the devaluation of the Naira and by the persistent rise in inflation.

“The Group returned gross earnings of N267.9 billion and profit before tax of N45.9 billion; a reflection of the strength of our underlying business, improving cost control as well as optimisation of revenue generating opportunities. Focus remains on organic earnings generation, divestment of non-core assets, in addition to balance sheet efficiency to further enhance capital.

“We remain focused on leveraging the strength of our diversified business model by exploiting synergy opportunities and cross-selling across our commercial banking, merchant banking & asset management as well as our insurance businesses towards creating sustainable value for our stakeholders.”

Statement of financial position

• Total assets of N4.8 trillion, up 15.3per cent (Dec 2015: N4.2 trillion)
• Customer deposits of N3.1 trillion, up 4.2per cent (Dec 2015: N2.97 trillion)
• Customer loans and advances (net) of N2.1 trillion, up 16.2per cent (Dec 2015: N1.8 trillion)