Economy

FBN Holdings: Lacklustre Performance Across Income Lines in Q3-17

Published

9 years ago

27/10/2017

First Bank of Nigeria Holdings Plc (FBNH) released unaudited Q3-17 results yesterday, wherein gross earnings grew marginally by 1.85% q/q and 0.40% y/y (1.77% above our estimate), while PBT and PAT rose 28.01% q/q (71.19% y/y) and 24.44% q/q (145.47% y/y), respectively.

The growth in earnings is broadly supported by (1) growth in funding income (by 7.73% q/q and 17.43% y/y), which more than subdued the 6.57% and 37.91% y/y contraction in NIR (above our estimate by 13.30%) and (2) decline in opex by 3.51% q/q (+2.27% y/y) to miss our estimate by 4.14%.

The contraction in NIR stemmed from significant declines in dividend income (-50.62% q/q and +119.18% y/y), net gains on foreign exchange income (-72.86%q/q and -96.16% y/y), net gains on investment securities (-259.215 q/q and -270.29% y/y), net fee income (-7.95% q/q and -3.77% y/y), net insurance premium (-33.44% q/q and -23.79% y/y), and net gains on financial instruments (-37.77% q/q and -13.82% y/y). The cumulative impact more than offset the surge in other income (+233.80% q/q and +209.68% y/y).

The marginal growth in funding income (broadly in line with our estimate) reflects the lackluster performance on the interest income lines – investment securities (-1.515 q/q and +22.35% y/y), loans to banks (+3.95% q/q and -24.48% y/y), and loans to customers (+8.80% q/q and 12.23% y/y) – and interest expense lines – deposit to customers (-2.30% q/q and -2.74% y/y), deposit from banks (-17.26% q/q and +85.56% y/y) and borrowings (=8.43% q/q and -8.19% y/y).

Specifically, over 9M-17, gross earnings grew by 5.17%, in line with our estimate. While PBT declined 3.52%, PAT grew by 7.81%, both above our estimates of -6.82% and -1.85% respectively. The marginal growth in gross earnings over the period broadly reflects the impressive yield on interest earning assets (+210 bps to 12.28%) and consequently, robust interest income, which more than offset the significant decline in NIR (47.08%).

Over 9M-17, asset quality deterioration persisted. Despite 190 bps contraction in NPL to 20.10% compared to H1-17, annualized cost of risk remains elevated, rising 20 bps to 5.60% (annualized) following additional provisioning of N35.18 billion in Q3-17, which raised total loan loss provision during the period to N97.69 billion, albeit 14.93% lower compared to N114.72 billion in 9M-16.

However, noteworthy is the 90.08% y/y growth in net recoveries from loans previously written off (with an additional recovery of N1.32 billion over Q3) which we believe reflects the gradual improvements in the general commerce and manufacturing sectors following increased FX liquidity. FBNH reported CAR of 17.8% for the bank in FY-16 and 17.6% for H1-17. Relative to both periods, CAR contracted to 17.2% in 9M-17, though still largely above the required regulatory minimum of 16% for systemically important banks. The 40 bps contraction over Q3 leaves a lot to question.

Parsing through the balance sheet, FBNH’s loan book declined 7.52% y/y (albeit higher 2.27% relative to H1-17), while the holding of investment securities increased 6.43% y/y (+5.50% from H1-17 level). On the other hand, deposits declined marginally by 10.85 y/y and 1.94% over H1-17.

For the rest of 2017, we expect interest expense will remain elevated, as liquidity pressure (liquidity ratio was down to 47.4% in 9M-17, from 50.4% and 52.7% in H1-17 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 N6.41, implying 4.23% upside from yesterday’s close price of N6.15, we have a HOLD recommendation on the stock. Our estimates are under review.

Economy

OTC Securities Exchange Falls 1.31% as Key Stocks Decline

Published

2 hours ago

19/05/2026

Adedapo Adesanya

By Adedapo Adesanya

Three bellwether stocks weakened the NASD Over-the-Counter (OTC) Securities Exchange by 1.31 per cent on Monday, May 18.

This brought the NASD Unlisted Security Index (NSI) by 54.71 points to 4,133.70 points from 4,188.41 points, and shrank the market capitalisation by N32.73 billion to N2.473 trillion from N2.506 trillion.

Yesterday, FrieslandCampina Wamco Plc contracted by N12.45 to sell at N146.55 per share compared with last Friday’s closing price of N159.00 per share, Central Securities and Clearing System (CSCS) Plc declined by N2.34 to N70.00 per unit from N72.34 per unit, and NASD Plc lost 50 Kobo to trade at N34.50 per share versus N35.00 per share.

The trio overpowered the N5.56 gained Newrest Asl Plc. This stock ended the trading session at N61.15 per unit, in contrast to the previous session’s N55.59 per unit.

During the trading day, the volume of securities traded by investors slid by 56.1 per cent to 514,142 units from 1.2 million units, and the value of securities dropped 29.8 per cent to close at N17.4 million versus N29.8 million, while the number of deals jumped 12.5 per cent to 27 deals from 24 deals.

Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by CSCS Plc with 60.8 million units exchanged for N4.1 billion, and Okitipupa Plc with 27.9 million units traded for N1.9 billion.

GNI Plc also ended the day as the most traded stock by volume on a year-to-date basis with 3.4 billion units worth N8.4 billion, trailed by Resourcery Plc with 1.1 billion units valued at N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units transacted for N1.2 billion.

Economy

FX Pressure Pushes Naira Lower to N1,373/$1 at Official Market

Published

2 hours ago

19/05/2026

Adedapo Adesanya

By Adedapo Adesanya

It was a horrible day for the Nigerian Naira in the different segments of the foreign exchange (FX) market on Monday, May 15, as its value further weakened against the United States Dollar.

In the black market window, the Naira lost N5 against the Dollar yesterday to sell for N1,390/$1 compared with the previous value of N1,385/$1, but at the GTBank forex counter, it remained unchanged at N1,383/$1.

In the Nigerian Autonomous Foreign Exchange Market (NAFEX), the Nigerian currency depreciated against the greenback by N2.66 or 0.19 per cent to sell for N1,373.70/$1 compared to last Friday’s rate of N1,371.04/$1.

Equally, it fell against the Pound Sterling in the same market segment by N9.05 to trade at N1,839.66/£1 versus N1,830.61/£1, and lost N5.42 on the Euro to close at N1,600.49/€1 versus N1,595.07/€1.

The performance of the local currency during the session indicates early worries despite all signals pointing to stability, amid improved Dollar sales by the Central Bank of Nigeria (CBN), with steady, higher oil receipts to bolster the nation’s reserves.

Activity at the market showed that turnover rose 57.3 per cent to $76.29 million on Monday from $48.49 million posted on Friday.

Over the weekend, S&P raised Nigeria’s credit ratings for the first time since 2012 and highlighted improved FX market liquidity and $10 billion turnover recorded in April 2026 as one of the major gains of the CBN-led FX reforms.

The agency said the liberalisation of the exchange rate has bolstered access to foreign currency and enabled a market-driven exchange-rate environment while supporting investor and consumer confidence.

Meanwhile, the cryptocurrency market was bullish on Monday as investors monitored developments in the Iran conflict and weighed the impact of surging oil prices on inflation and US interest-rate expectations.

Ethereum (ETH) gained 0.7 per cent to trade at $2,134.10, Cardano (ADA) rose by 0.6 per cent to $0.2515, Solana (SOL) expanded by 0.3 per cent to $85.11, Binance Coin (BNB) jumped 0.2 per cent to $643.29, TRON (TRX) increased by 0.03 per cent to $0.3565, and Bitcoin (BTC) advanced by 0.02 per cent to $76,912.12.

On the flip side, Dogecoin (DOGE) slid by 1.5 per cent to $0.1044, and Ripple (XRP) decreased by 0.5 per cent to $1.38, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 apiece.

Economy

Customs Street Opens Week Bearish With 0.05% Loss

Published

2 hours ago

19/05/2026

Dipo Olowookere

By Dipo Olowookere

A marginal 0.05 per cent loss was recorded by Customs Street on Monday, as sell-offs by market participants remained.

This was driven by the desire of investors to book profits, having witnessed a significant price appreciation on the stocks in their portfolios.

Yesterday, bargain-hunting in the banking space, which resulted in the sector closing 0.17 per cent higher, could not prevent the Nigerian Exchange (NGX) Limited from going down.

Data showed that the consumer goods segment lost 0.26 per cent, the insurance counter depreciated by 0.20 per cent, the industrial goods index shed 0.09 per cent, and the energy industry retreated by 0.03 per cent.

As a result, the All-Share Index (ASI) eased by 126.09 points to 250,204.83 points from 250,330.92 points, and the market capitalisation contracted by N81 billion to N160.363 trillion from N160.444 trillion.

NCR Nigeria and Zichis declined by 9.99 per cent each to sell for N161.20 and N26.49, respectively, Industrial and Medical Gases shrank by 9.93 per cent to N38.10, Sovereign Trust Insurance depreciated by 9.86 per cent to N2.65, and DAAR Communications slipped by 9.78 per cent to N2.03.

On the flip side, Oando gained 10.00 per cent to finish at N51.70, University Press also rose by 10.00 per cent to N5.50, Deap Capital soared by 9.96 per cent to N5.96, May and Baker expanded by 9.94 per cent to N52.00, and Trans-Nationwide Express grew by 9.92 per cent to N7.76.

Yesterday, 800.5 million equities worth N37.1 billion exchanged hands in 87,096 deals compared with the 1.1 billion equities valued at N44.3 billion traded in 65,744 deals last Friday. This showed that the number of deals went up by 32.48 per cent, while the trading volume and value went down by 27.23 per cent and 16.25 per cent, respectively.

The most active stock on the first trading session of this week was UBA with a turnover of 65.0 million units worth N2.8 billion, Fidelity Bank traded 57.3 million units for N1.3 billion, Access Holdings sold 42.3 million units valued at N1.1 billion, DAAR Communications exchanged 36.7 million units for N81.8 million, and Secure Electronic Technology transacted 36.6 million units worth N33.0 million.