FBN Holdings Announce N89.7b Profit For 2020 Year End

FirstBank Holdings Uk-Eke
FBN Holdings Uk-Eke

FBN Holdings Plc has announced a profit of N89.7 billion for the financial year ended December 31, 2020.

This figure which represents an increase of 21.8 per cent over the figure achieved in the corresponding period of 2019l, the Holding company explained on Thursday, was higher when compared with N73.7 billion achieved in 2019.

According to FBN Holdings, operating income closed the year at N426.3 billion as against N417.5 billion in 2019.
Although there was a marginal drop in gross earnings by 1.9 per cent from N590.4 billion in the previous year to N579.4 billion as the end of the 2020 financial year, the company’s total assets rose by 23.9 per cent to N7.7 trillion when compared with N6.2 trillion achieved in the corresponding period of 2019.

Also, customers deposits grew to N4.89 trillion, up from N4.02 trillion posted in the previous year.

According to FBN Holdings the 1.9 per cent drop in gross earnings was the result of a 10.9 per cent year-on-year decline in interest income to N384.8 billion as against N431.9 billion recorded in 2019. It notes that this was occasioned by the drop in government securities which declined on the short and long end of the yield curve.

Commenting on the result, Group Managing Director, Urum Eke said the company was pleased to close the year in a healthy note despite the difficult operating environment.

“FBNHoldings is pleased to close the year in a healthy financial position despite the difficult operating environment that has been characterized by unprecedented events as a result of the pandemic and challenging economic environment.

“As part of our strategic planning cycle, which is in the second year, we exited the insurance underwriting business through the sale of our interest in FBNInsurance to our long-term partner, the Sanlam Group. This decision is consistent with our portfolio optimisation strategy, underscored by the renewed focus on deepening our foothold in the banking sector through increased investment in digitalisation, innovation, and expansion in financial services for  the benefit of our existing and new customers. The proceeds from the sale have been injected in First Bank of Nigeria to strengthen the core business of the Group and drive further market growth.

“Five years ago, we outlined our strategy to diversify our income stream by boosting non-interest income through a transaction-led banking model. We believe this decision reduced the burden on our customers during the lockdown by providing seamless access to banking service, as well as, support the effort of the Government and other donor agencies to reach Nigerians with the COVID-19 support programs.

“During the year 2020, Profit before tax grew 11.2% y-o-y to ₦ 83.7 billion and our non-interest income recorded a growth of 26.7% y-o-y to ₦ 174.7 billion. These results were despite the challenging environment evidenced by the decline in fixed income rates and higher cash reserve requirements leading to a 10.9% y-o-y decline in interest income to ₦ 384.8 billion. However, we mitigated the impact on net interest income by containing interest expense through reducing the cost of deposit and driving low-cost deposits.

“We remain focused on driving operating expenses down and improving cost to income ratio. In 2020, operating expense was up marginally by 0.5% y-o-y growing significantly slower than inflation. Notwithstanding, our strategy is to continue to deploy the two-pronged approach of driving revenue through the transaction-led banking model, whilst implementing initiatives geared towards containing operating cost, to help reduce the cost to income ratio.

“ I am also delighted with the improved risk management processes and architecture which continues to yield positive results. Consistent with our commitment to a single-digit NPL to the market, we further reduced the ratio to 7.7% (Dec 2019: 9.9%).

“ Overall, whilst these developments represent significant progress in our journey to reposition the Group, over the planning cycle, we will be increasing the pace of implementation of our mid-range initiatives including the optimisation of our portfolio to extract increased value from existing assets, and evaluating options to support our vision of remaining dominant in the financial services industry in Africa.”