Nigeria oldest financial institution, FBN Holdings released its 2024 third quarter results showing a pre-tax profit of N198.871 billion, representing a 216.50% YoY growth.
The Q3 results, combined with the first half of the year results, brought the bankโs nine-month 2024 pre-tax profits to N610.861 billion, representing 128% YoY growth.
Despite a challenging economic environment, the bank leveraged strong interest income and non-interest earnings to drive up profits significantly, though rising operating expenses and currency volatility presented material headwinds.
Key highlights (2024 Q3 vs 2023 Q3)
- Interest Income: N685.316 billion +178.61% YoY
- Interest Expense; N326.310 billion +208.28% YoY
- Net interest income; N359.006 billion +156.19% YoY
- Impairment charge for losses: N78.401 billion +222.31% YoY
- Net interest income after impairment charge for losses: N280.605 billion +142.31% YoY
- Fees and commission income: N75.401 billion +43.84% YoY.
- Fees and commission expenses: N14.893 billion +59.56% YoY
- Operating profit: N198.501 billion +216.97% YoY
- Profit after tax: N166.014 billion +245.67% YoY.
- Loans and advances to customers N9.366 trillion +47.27%.
- Total Assets N27.493 trillion +63.32%.
- Customersโ deposits N16.724 trillion +56.84%.
- Net Assets: N2.596 trillion +48.59%
Analysis and Commentary
Net interest income remained solid, hitting N359 billion in Q3 (up 156%) and N873.9 billion over nine months (a 133% rise).
- Interest Income for Q3 rose sharply to N685.3 billion, a 178% increase year-on-year, with the nine-month figure reaching N1.63 trillionโup 165% from N617.1 billion in the same period in 2023.
- This boost primarily reflects a strategic increase in lending volumes and an environment of rising rates, which has enabled banks like FBN Holdings to maximize returns on loans and other interest-bearing assets.
- However, Interest Expense also escalated to N326.3 billion in Q3, a 208% year-on-year increase, with the nine-month figure reaching N759.1 billionโup 214% year-on-year.
- This reflects the high cost of funding in Nigeriaโs current high-interest rate regime, with rising costs of customer deposits and borrowed funds squeezing net margins despite revenue growth.
Other earnings highlights
Fee and Commission Income rose by 44% year-on-year to N75.4 billion in Q3, reaching N205.3 billion for the nine months, benefiting from higher transaction volumes amid a digital banking push and an expanded customer base.
- Net Gains from Financial Instruments spiked to N119.6 billion in Q3, a dramatic increase from N16.3 billion a year earlier.
- This category reached N551.8 billion over nine months, highlighting the bankโs ability to capitalize on favorable trading and investment conditions.
Balance Sheet growth
Customer deposits grew to N16.7 trillion as of Q3 2024, a substantial increase from N10.7 trillion at the end of December 2023. The rise was driven by growth in domiciliary deposits.
- The domiciliary account deposits rose significantly to N5.36 trillion in Q3 2024 from N2.75 trillion in December 2023. This jump indicates a higher accumulation of foreign currency deposits, possibly due to elevated dollarization in customer savings amid exchange rate volatility
- Term deposits increased to N3.46 trillion from N2 trillion at the end of 2023. This growth reflects FBN Holdingsโ emphasis on fixed deposits to stabilize funds, likely motivated by the competitive interest rates offered to attract and retain funds for longer terms
The loan portfolio increased to N9.37 trillion in Q3 2024 from N6.36 trillion in December 2023, with notable drivers in this growth pattern
- Further insights reveal overdraft balances jumped from N866 billion to N2.48 trillion, while term loans increased from N5.3 trillion to N7.33 trillion.
- These gains appear to reflect the bankโs push toward flexible credit products and a high-demand environment for short-term financing solutions.
- Project finance loans, while smaller, grew to N5.47 billion in Q3 2024, reflecting FBN Holdingsโ selective lending in infrastructure and high-impact sectors.
The latest results will come as a boost to FBN Holdings as it embarks on a planned N350 billion rights issue.
- The financial holding company recently announced commencement ofย its Rights Issue, offering 5.983 billion ordinary shares at 50 kobo each, priced at N25 per share, raising N150 billion for existing shareholders.
- The offer is structured as one new share for every six ordinary shares held as of October 18.
- The bankโs share price is currently trading at N27.1 per share.