FBN Holdings Posts N46 Billion Profit Before Tax in Six Months

FBN Holdings Plc yesterday announced a profit before tax of N45.9billion for the half year ended June 30, 2016, down 11.9 per cent from the N52.1billion reported in the corresponding period of 2015. Similarly, profit after tax fell by 10.5 per cent to N35.9billion, from N40.1billion recorded in the corresponding period of 2015.

The profit came from gross earnings of N267.9billion, compared with N271.3billion in 2015. The decline of 1.2 per cent in gross earnings reflected the slow business environment and restricted trade flows. Although interest income declined 17.8 per cent to N169.2 billion, from N205.8 billion in 2015, this was offset by a 52 per cent increase in non-interest income to N94.1 billion, up from N61.9 billion in 2015.

Commenting on the results, the Group Managing Director, FBN Holdings, 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.”

A further analysis of the bank’s performance showed that net impairment charge on credit losses rose to N69.9 billion, from N22.6 billion primarily due to the impact of the devaluation of the Naira on the oil and gas, real estate and general sectors.

However, the bank said it has continued to revamp its credit and risk management processes towards generating high quality assets and have begun to see improvements in this process operationally.
FBN Holdings recorded improvement in cost-to-income ratio that improved to 47.4 per cent, compared with 61.6 per cent in 2015. This was achieved due to the 13 per cent decline in operating expenses coupled with strong growth in operating income.

In addition to consolidating on existing gains, we aim to extract further efficiencies from the accelerated migration of a large number of back-end processes to the Central Processing Centre; implementation of shared services across the Group to drive economies of scale, enhancing budget discipline on tighter budget controls and monitoring with scheduled release of funds, enhancing workforce productivity, embracing leaner operating structures and automation of transactions and processes, and on-going implementation of enterprise resource planning framework to drive process efficiencies.