FirstBank’s N410bn earnings leads as Tier 1 banks results tumble in

Among Tier-1 Nigerian banks, First Bank of Nigeria Limited led others with N410.6 billion recorded in full year 2014 gross earnings, up by 21% year-on-year (y-o-y) against the 2013 level of N339.3 billion.

Recall that of  the bank’s rivals, GT Bank plc reported N278.520bn full year 2014 gross earnings; Zenith Bank plc reported N403.3bn gross earnings in same period; Access Bank plc recorded gross earnings of N245.1bn; United Bank for Africa plc reported N290.02bn gross earnings in full year 2014; while Stanbic IBTC Holdings plc recorded N130.6bn as 2014 gross earnings.

First Bank’s net interest income increased by 4.2% to N215.4 billion (December 2013: N206.7 billion) and non-interest income increased by +78.1% to N88.0 billion due to a one-off exchange rate movement gain on the long position of the Bank’s foreign currency balance sheet and to a lesser extent other income, largely from private banking services.

The bank’s profit before tax increased by 5.9% to N81.4 billion (Dec 2013: N76.9 billion). Total assets increased by 7.5% y-o-y to N3.5 trillion (December 2013: N3.2 trillion), with net customers loans and advances closing at N1.8 trillion (+21.7% y-o-y). Customer deposits were flat at N2.6 trillion (December 2013: N2.6 trillion).

FBN Holdings plc Tuesday at the Nigerian Stock Exchange (NSE) released its audited results for the full year ended December 2014. Its gross earnings stood at N480.6 billion, up 21.3% year-on-year (against December 2013: N396.2 billion). Net interest income was N243.9 billion, up 6.0% year-on-year (December 2013: N230.1 billion).

Non-interest income was N111.8 billion, up 66.1% year-on-year (December 2013: N67.3 billion). Operating income was N355.1 billion, up 19.8% year-on-year (Dec 2013: N296.4 billion).

Impairment charge for credit losses of N25.9 billion was up 27.7% year-on-year (December 2013: N20.3 billion). Operating expenses of N236.8 billion was up 27.5% year-on-year (December 2013: N185.8 billion). Profit before tax was N92.9 billion, up 1.7% year-on-year (December 2013: N91.3 billion).

Profit after tax was N82.8 billion was up 17.3% against December 2013 level of N70.6 billion.

Total loans & advances to customers (net) grew by 23.2% y-o-y to N2.2 trillion (December 2013: N1.8 trillion) driven largely by loan growth in First Bank of Nigeria only at (+21.7%). Sectors driving loan growth on a y-o-y basis were the general commerce, construction, oil and gas and power. Corporate and institutional banking customers constitute 70% of the loan book, with retail loans at 16.1%. “In line with our strategic intent on focusing on assets that will generate higher yields, loans to commercial banking customers now constitute 6.4% (Dec 2013: 2.2%) of the loan book,” the bank said.

The Commercial Banking Group achieved a Basel 2 capital adequacy ratio of 16.7%19 (December 2013: 13.6%), tier 1 ratio of 12.5% (December 2013: 11.6%).

As a result of increased capital requirements by the regulator, occasioned by the adoption of Basel 2 Capital Accord, First Bank of Nigeria Limited has reduced its pay-out ratio and retained substantial portion of its profit to boost capital.

The Holding company is proposing a cash dividend of 10kobo per 50 kobo share and a scrip (bonus) issue of one (1) Share for every ten Shares held, amounting to a total distribution of N1.05k per share. This is compared to December 2013 when it paid N1.10kobo dividend.

The company’s total assets rose to N4.3 trillion, up 12.2% year-on-year (against December 2013: N3.9 trillion).

Customer deposits of N3.1 trillion, up 4.2% year-on-year (December 2013: N2.9 trillion). Customer loans and advances (net) of N2.2 trillion, up 23.2% year-on-year (December 2013: N1.8 trillion)

Pre-tax return on average equity stood at 18.7% (December 2013: 20.0%); post-tax return on average equity of 16.7% (December 2013: 15.5%). Net interest margin of 7.6% (December 2013: 8.0%). Cost to income ratio (CIR) rose to 66.7% (December 2013: 62.7%). Non Performing Loan ratio declined to 2.9% (December 2013: 3.0%). The Banking group’s liquidity ratio was 44.0% in FY’14 (December 2013: 44.2%) .

FBN Holdings completed the acquisition of 100% equity of Kakawa Discount House Limited (Kakawa) which is now a direct subsidiary of FBNH. 

FBN Insurance Limited completed the acquisition of 100% equity interest in Oasis Insurance Plc.  FirstBank acquired ICB Senegal, to complete the acquisition of the International Commercial Bank’s (ICB) West African operations.  FirstBank concluded a US$450 million subordinated Tier 2 debt issuance in the international markets for general banking purposes.

Commenting on the results, Bello Maccido, the Group CEO said: “The Group recorded a strong financial performance in 2014, in spite of the highly challenging operating environment particularly for our flagship business, First Bank of Nigeria. As such, th e performance by the Banking Group is a testament to the underlying strength of our commercial banking business which is built on an extensive retail network and a robust information technology platform. Notwithstanding the tough operating environment, the Group showed commendable growth across all the key performance indicators buoyed by the complementary performance of our non – bank subsidiaries with g ross earnings growing by 21.3% to N 480.6 billion and Profit before tax at N 92.9 billion ‛”.

He said‚ “We remain focused on diversifying our revenue streams through the extraction of value from our recent bank acquisitions, consolidating our position in the investment banking space, especially with the acquisition of Kakawa, and expanding our insurance business scope. Our investment in technology, human capita l and portfolio expansion are beginning to shape the long – term fundamentals of the Group and will deliver a positive return on investment over the longer term”.

Commenting on the results for the Commercial Banking Group, GMD/CEO of First Bank of Nigeria Limited, Bisi Onasanya said : “ The financial  year 2014 witnessed many activities in monetary and fiscal policies due to t h e m o n e t a r y tightening stance of the Central Bank of Nigeria (CBN). Notwithstanding the impact of these policies on our business, First Bank of Nigeria delivered strong results with Gross earnings growing by 2 2. 1% to N 4 55. 4 billion and profit before t ax increasing by 9.1% to N 9 4.5 billion.”  In response to the regulatory changes and business environment  he said, “we revised the Bank’s operating model to ensure strategic realignment and optimal use of available resources to take advantage of the increasing growth opportunities in retail banking. Although FirstBank remains the biggest bank by balance sheet size in sub – Saharan Africa , our focus in coming periods will be to optimize our resources towards improved efficiency and profitability rather than size .”