FBN Holdings Plc in more forex losses in Q1 2024

FBN Holdings Plc rolled in foreign exchange losses of about N95 billion in the first quarter in a massive build-up for the second year after a whooping net foreign exchange loss of roughly N333 billion at the end of the 2023 financial year.

On the other side of gains, the bank also kept windfall from net gains on financial instruments running for the second year at N289 billion in the first quarter after the gains towered at N680.6 billion at the end of last year.

The bank’s first quarter interim financial report at the end of March 2024 shows that the multinational banking group is again moving against the trend of continuing huge foreign exchange gains among banking majors as happened last year.

It plunged from a net foreign exchange gain of N3 billion in the same quarter in 2023 after a similar plunge from a net foreign exchange gain of N32.4 billion in the 2022 financial year.

On the other side of windfall, net gains from financial instruments shot to the sky in the first quarter from a net loss of N2 billion in the same period in 2023.

Equally maintaining the pattern of the preceding financial year, the windfall from net gains from financial instruments is big enough to seal up the foreign exchange puncture on the earnings basket and yet power more than four times profit jump to N208 billion for the first quarter.

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The profit figure for the quarter is already more than 67 per cent of the full-year after-tax profit of N310.4 billion for FBN Holdings in 2023.

Supporting the strong first quarter outing is an outstanding growth in interest earnings, which jumped two and half times year-on-year to N455 billion at the end of March 2024. This is a much-accelerated growth from an increase of 74 per cent in interest income to N960 billion for the 2023 financial year.

With that, FBN Holdings has already generated over 47 per cent of the 2023 full year’s interest income within the first quarter. This sets an unprecedented earnings growth momentum for the banking group for the current financial year.

Adding to the strength in earnings is a net fee and commission income which grew by nearly 53 per cent to close at almost N54 billion for the quarter. Other operating income also advanced from N2.6 billion to over N5 billion.

The only disappointment is the drop of almost 64 per cent in net gains on the sale of investment securities to close at N12 billion for the quarter.

Virtually all-around advances in key income lines of the bank added up to gross earnings of N730 billion for the group for the first quarter, rising by 181 per cent year-on-year.

Apart from foreign exchange losses, two cost elements encroached on revenue during the review period. These include interest expenses, which multiplied three and third times year-on-year to stand at more than N226 billion at the end of the first quarter.

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The other rising cost is loan impairment charges that rose more than two and half times to almost N43 billion. Loan loss charges are shooting up for the second year after advancing by more than 231 per cent last year to N227.4 billion.

The two cost lines claimed a significant part of the increase in interest income, which lowered the margin of increase in net interest income after loan loss charges to 95.5 per cent to close at N185.7 billion for the first quarter.

The windfall from net gains from the financial instruments compensated for the cost incursion and the cost savings from operating expenses.

At N212.8 billion, total operating cost slowed down relative to earnings at an increase of 91.4 per cent year-on-year. The operating cost margin dropped from 42.8 per cent to 29.1 per cent over the review period.

Strong revenue growth with significant cost savings summarises the earnings story of FBN Holdings in the first quarter. The favourable combination enabled an increase in net profit margin from 19.3 per cent in the same period last year to 28.5 per cent at the end of the first quarter of 2024.

The bank earned N5.76 per share at the end of the first quarter, rising from N1.38 per share in the same quarter in 2023.