FBNH released its H1-22 financial report this morning (29 July 2022), which showed that the Holdco recorded growth in its top and bottom-lines.
The performance was supported by the growth recorded in core income as a combination of increased risk asset creation and a higher yield environment drove the performance during the period. Consequently, the Holdco recorded an EPS from continuing operations of NGN1.55/s (+47.6% vs H1-21).
Interest income grew by 40.6% y/y to NGN226.35 billion as income from all the line items increased significantly, as a combination of the higher yield environment and improved risk asset creation (+17.3% y/y to NGN3.38 trillion) propelled income generation. Specifically, income from loans and advances to banks and customers advanced by 55.9% y/y and 36.3% y/y, respectively, while income from investment securities rose by 53.5% y/y.
Interest expense grew by 28.4% y/y to NGN73.44 billion due to the significant increase in the interest expense on deposits from customers (+57.3% y/y to NGN48.49 billion) – we attribute this to the continued increase in term deposits (+16.3% y/y to NGN1.17 trillion). However, the expense on interest-bearing borrowings declined marginally (-4.5% y/y to NGN11.42 billion). Altogether, given that interest income growth outstripped expense growth, net interest income grew by +47.3% y/y.
Elsewhere, non-interest income (NII) grew marginally by 1.7% y/y to NGN120.63 billion, driven by the significant increase foreign exchange revaluation (+3,397.9% y/y to NGN16.51 billion). Additionally, the growth in income from fees and commissions (+1.7% y/y to NGN58.37 billion) and net gains on investment securities (+4.6% y/y to NGN22.4 billion) were partly responsible for the period on period expansion.
Operating expenses rose by 21.9% y/y as major contributory lines advanced – AMCON levy (+71.0% y/y to NGN52.47 billion) and personnel expenses (+7.9% y/y to NGN55.31 billion). However, the expansion in Opex, was below the operating income expansion of 27.2% y/y, which led to the Holdco’s cost-to-income ratio (after accounting for LLEs) declining significantly to 73.8% (vs 77.1%: H1-22).
Overall the strong income generation during the period resulted in the Holdco recording a profitability expansion, as profit before tax grew by 45.1% y/y to NGN65.88 billion.
Comment: The bank’s performance was remarkable during the period and aligned with our expectations. For the rest of the year, we remain optimistic that the Holdco can maintain the pace of growth in the year so far, which should lead to a sustenance of the strong performance from the prior year. Our estimates are under review.
