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FBN Holdings nets N59.74bn profit on 42% drop in impairment charge

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FBN Holdings changes dividend payment qualification date

Board of FBN Holdings Plc, on Friday presented its audited financials for the year
ended December 31, 2018, which is the best since the 2015 financial year, indicating a
31.36% growth in net profit, which was helped by a combination of the 42.22%
reduction in impairment charge for credit losses; 51.86% net insurance premium
revenue rise; 53.96% increase in net gains on foreign exchange and net gains on sales
of investment securities of 119.66%.
The directors have therefore proposed a dividend of 26 kobo from the Earnings Per
Share of N1.66, which rose from N1.05 in 2017, representing a 58.23% growth.
Gross earnings for the year, N496.858bn of which was derived from Nigeria and
N86.819bn from outside Nigeria, dropped by 2.01% from N595.446bn in 2017 to
N583.477bn; with commercial banking group contributing the lion’s share of
N514.793bn, followed from afar by N45.259bn from the merchant banking and asset
management group; while insurance group fetched N22.663bn. Interest income
dropped by 7.49% to N434.41bn from N469.586bn, helped by the N402.379bn from
commercial banking and N134.488bn interest expense, which shot group interest
expense from N138.064bn to N150.242bn, up 8.82%. Net interest income, therefore,
stood at N284.168bn, a decline of 14.28% from prior year’s N331.522bn.
Impairment charge for credit losses reduced by N63.513bn from N150.424bn to
N86.911bn, the bulk of which was N87.871bn by the commercial banking group,
following which net interest income after impairment charge for credit losses stood at
N197.257bn, up 8.92% from N181.098bn.

Net insurance premium revenue climbed to N15.541bn from N10.234bn; fee and
commission income increased to N92.724bn from N74.453bn in 2017, mainly the
N34.029bn from money transfer commission, as against N24.989bn in prior year,
followed by N12.329bn from account maintenance, which was almost double the
N6.686bn in 2017, just as brokerage and intermediations contributed N11.901bn, a
significant increase when compared to N1.554bn in the preceding year, among others.
Fee and commission expense increased 43.02% from N12.117bn to N17.33bn.
Net gains on foreign exchange stood at N32.636bn from N21.062bn; net gains on sales
of investment securities climbed to N5.733bn from N2.61bn; just as net losses from
financial instruments at fair value stood at N3.135bn from N11.117bn gains in 2017.
The group earned dividend income of N2.312bn during the period, representing 12.62%
from N2.053bn; other operating income dropped 17.12% from N3.901bn to N3.233bn;
insurance claims for the period rose 16.73% from N4.041bn to N4.717bn.
Operating expenses rose from N134.799bn from N147.976bn, representing a 9.78%
rise; operating profit improved by 20.66% from N54.092bn to N65.265bn; the share of
profit of associates dropped from N430m to N23m.
Profit before tax, therefore, rose 19.75% up from N54.522bn in 2017 to N65.288bn;
income tax expense dropped 38.67% from N9.04bn to N5.544bn; resulting in a net profit
of N59.744bn, from N45.482bn in the corresponding full-year of 2017. The group is yet
to achieve its 2014 level of N84.011bn net profit, which translated to EPS of N2.35.

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