Banking
FBN Holdings Plc: Lacklustre Performance Across Income Lines
By Cordros Research
First Bank of Nigeria Holdings Plc (‘’FBNH’’) released unaudited Q2-17 results few days ago, wherein gross earnings grew marginally by 4.63% (down 8.01% y/y and 66 bps below our estimate), while PBT and PAT contracted 22.50% q/q (-35.09% y/y) and 18.64% q/q (-13.15% y/y), respectively.
The contraction in earnings broadly reflects poor performance across key line items; interest income grew slightly by 3.62% (57 bps below our estimate), while NIR declined 55 bps (-68.16% y/y) to miss our estimate by 7.99%.
On the other hand, the impressive growth in net insurance premium (+126.56% q/q and 95.00% y/y) is worthy of note, albeit inconsequential to offset the sanguine performance of the major income line items.
NIR contracted marginally q/q, as significant declines in dividend income (-78.43% q/q and -56.22% y/y), net gains on foreign exchange income (-22.35%q/q and 95.75% y/y) – reflecting the limited leg-room for FX related gains in Q1 due to the relative stability of the NGN – and a net loss on investment securities offsets the slight improvement in net fee income (+1.96% and -0.84% y/y) and the surge in net gains on financial instruments (+149.21% q/q and -953.21% y/y) – due to impressive gains on derivative instruments.
The marginal growth in funding income reflects the decline in yields on the bank’s portfolio of investment securities (-6.50% q/q), despite 11.08% growth in loans and advances to customers. In the same vein, interest expense rose 1.90% q/q (+46.26% y/y), attributable to the 14.26% growth in interbank placements, which was muted by the bank’s improved deposit mix – with CASA share of deposits representing c.56% of total deposit.
Overall for H1-17, gross earnings rose 7.73% y/y (34 bps below our estimate), buoyed by impressive growth in interest income (+37.34% y/y) – translating to annualized asset yield expansion of 241 bps y/y to 12.11% – and net insurance premium (+56.91% y/y), offsetting the decline in NIR (-50.47% y/y and 3.07% q/q).
Interest expense (+58.27% y/y) rose significantly, largely due to the surge in borrowing expenses by 49.26% (total borrowings rose 14.83% y/y and 21.16% compared to FY-16 due to the N60.56 billion facility secured from AFDB in January 2017), translating to a 54 bps y/y expansion in annualized cost of funds to 2.94%. However, the impressive asset yield more than offsets the funding costs, resulting in 163bps NIM expansion to 8.83% (annualized).
Over H1-17, the asset quality deterioration rhetoric persisted. Despite 80 bps contraction in NPL to 22%, cost of risk remains elevated, rising 170 bps to 8.20% (annualized). Though provisioning declined 10.74 y/y, reflecting the 9.02% reduction in specific impairment, it rose 16.54% over Q2-17 due to the 17.57% q/q increase in specific impairment. However, noteworthy is the 75.89% y/y growth in net recoveries from loans previously written off, which we believe reflects the gradual improvements in the general commerce and manufacturing sectors from increased FX liquidity.
FBNH reported CAR of 17.8% for the bank in FY-16 and 18.1% for Q1-17, relative to both periods CAR contracted to 17.6% in H1-17, though still largely above the required regulatory minimum of 16% for systemically important banks, the 50 bps contraction over Q2 leaves a lot to question.
Overall, operating income declined 2.58% y/y in H1 (-18.15% y/y and +5.26% q/q in Q2-17) 60 bps below our estimate. Gross opex rose 11.76% y/y (+9.38% y/y and 14.15% q/q in Q2-17) 2.88% above our estimate, following hikes in operating expenses (+22.98% y/y), insurance claims (+32.68%), and depreciation expenses (+6.15% y/y), while personnel expenses (-1.79% y/y) contracted marginally.
Consequently, cost to income ratio and annualized operational leverage of 54.37% (47.39% in H-16) and 4.8x (4.5x in H1-16) beat our 52.53% and 4.6x estimates, respectively.
Overall, PBT and PAT declined y/y by 22.36% and 17.76% y/y, respectively.
Parsing through the balance sheet, FBNH’s loan book declined 3.75% y/y (+7.95% from FY-16 level), while the holding of investment securities increased 28.32% y/y (+11.79% from FY-16 level), not surprising, given the attractive yields on fixed income securities. On the other hand, deposits rose marginally by 2.06 y/y and 1.26% over FY-16 – largely driven by the 3.88% y/y growth in CASA deposits.
For the rest of 2017, we expect interest expense will remain elevated, as liquidity pressure (liquidity ratio was down to 50.4% in H1-2017, from 55.9% and 52.7% in H1-16 and FY-16, respectively) persists, and with the US Feds rate hike impact on the LIBOR further compounding the already stretched LCY interest rate.
Although we expect the re-pricing of assets, higher yields on investment securities, and FX interest income to support NIM, risk asset creation will remain subdued as the bank takes strategic steps to clean its loan portfolio.
On impairment charges, the bank’s restructuring of some FCY obligations reflected in the contraction in NPL during the period, we expect this to contract further as the bulk of the upstream oil and gas reclassification reflects in the balance sheet, resulting in lower provisioning by FY-17 in line with our previous forecast.
Based on our last TP of N5.37, implying 10.09% downside from last week’s close price of N5.97, we have a SELL recommendation on the stock. Our estimates are under review.
By Aduragbemi Omiyale
A collaboration to enable fast money transfers into Nigeria has been entered into between Flutterwave and Xoom, PayPal’s international digital money transfer service.
The partnership allows Xoom transfers to be converted by Flutterwave and settled locally in Naira, enabling quick transfers directly into recipients’ bank accounts at Access Bank, UBA, Zenith Bank, First Bank, GTBank, and additional participating banks across Nigeria.
The deal also enables Xoom’s global network with Flutterwave’s local payout infrastructure, allowing users globally to send funds directly into Nigerian bank accounts with improved speed and efficiency.
Nigeria is the leading remittance recipient in Sub-Saharan Africa, receiving over $20 billion in personal remittances in 2024. Despite this volume, receiving international payments has historically remained complex due to FX constraints and settlement delays. This collaboration helps address those challenges in a market of more than 232 million people, where the ICT sector is projected to contribute 21 per cent of GDP by 2027.
By combining Xoom’s expansive reach with Flutterwave’s local compliance and banking partnerships, the two companies are providing a more accessible financial corridor for the continent.
Xoom, a PayPal service, is a fast and secure international digital money transfer service that enables consumers to send money, pay bills, and reload phones for friends and family in approximately 160 markets globally.
As part of PayPal’s global payments ecosystem, Xoom leverages advanced fraud protection, compliance capabilities, and a trusted global network to help millions of customers move money quickly and securely across borders.
“We’re excited to have been chosen by Xoom for their Nigeria expansion. Millions of Nigerians rely on money from abroad to support everyday needs, whether it’s families receiving help from loved ones, freelancers getting paid for their work, or individuals earning income from the global economy. This helps make it easy and more reliable for people in Nigeria to receive funds and stay connected to opportunities beyond borders,” the chief executive of Flutterwave, Mr Olugbenga GB Agboola, stated.
By Aduragbemi Omiyale
An initiative known as Nigeria Lightning Rounds, designed to expand funding opportunities for Nigerian startups and small businesses by connecting founders with local and international investors, has been launched by ProvidusUnity Bank, in partnership with US-based global venture firm and accelerator, gener8tor.
Scheduled to be held on July 15, 2026, Nigeria Lightning Rounds will feature carefully selected startups engaging with targeted investors who have expressed interest in supporting Nigerian innovation.
Participating founders will have the opportunity to pitch their businesses through focused 15-minute virtual sessions facilitated by gener8tor and ProvidusUnity Bank’s networks.
The program will focus on high-growth sectors including fintech, healthtech, manufacturing, sustainability, and AI, but welcomes SMEs from all industries, with intending participants urged to apply via https://www.gener8tor.com/lightning-rounds/nigeria.
“We recognise that access to capital remains one of the biggest challenges facing entrepreneurs in Nigeria. Through our partnership with gener8tor, we are creating a platform that connects promising Nigerian founders with investors who can provide the support required to scale their businesses,” the Head of Business Development at ProvidusUnity Bank, Mr Ernest Elue, stated.
“The partnership reinforces ProvidusUnity Bank’s commitment to strengthening Nigeria’s entrepreneurial ecosystem by supporting innovation, enabling access to opportunities, and creating pathways for businesses with high-growth potential,” he added.
Also commenting, the Director of Lightning Rounds at gener8tor, Ms Elizabeth Larios, said, “gener8tor is thrilled to partner with ProvidusUnity Bank to extend the Lightning Rounds model into Nigeria.
“This collaboration reflects our commitment to building equitable ecosystems and driving capital to the most promising and underrepresented entrepreneurs.”
Lightning Rounds are a signature initiative of gener8tor’s investment platform, which has facilitated thousands of investor-startup meetings globally. The format is optimised to eliminate friction, reduce bias in early-stage fundraising, and help founders secure capital from investors aligned with their mission and stage. gener8tor’s previous Lightning Rounds for Nigerian Founders in 2025 featured 18 participating Investors and led to 50 investment meetings facilitated.
By Modupe Gbadeyanka
The verification of the depositors of the 46 microfinance banks, whose operating licenses were revoked by the Central Bank of Nigeria (CBN) over a week ago, has commenced.
The exercise, aimed at refunding those whose funds were trapped in the small lenders, is being conducted by the Nigeria Deposit Insurance Corporation (NDIC).
In a statement on Thursday, the agency said its staff members have been positioned at the offices of the affected banks across the country to attend to depositors.
It was disclosed that depositors of the defunct banks, who had their Bank Verification Numbers (BVNs) linked to their accounts in the failed banks, will be paid through their alternative accounts in existing banks.
However, depositors whose BVNs were not linked to their accounts in the failed banks have been encouraged to visit the affected banks’ offices with proof of account ownership, a passport photograph, verifiable means of identification (Driver’s Licence, Permanent Voter’s Card, International Passport or National ID Card) and BVN.
NDIC also stated that depositors can alternatively file their claims online through its website: www.ndic.gov.ng, to complete the Pre-Verification Claims Form by clicking on the Search Bar, and typing Pre-Verification Claims Form; opening the Form and filling in their details. They can also do so by clicking the link: https://ndic.gov.ng/ndic-pre-verification-claims-form/ or by visiting any of the NDIC offices closest to them to file their claims.
For further enquiries, the corporation can be reached on any of the following lines: 09037273810, 09038197064, 08104220807, 09064657140.
