For the year ended December 31st, 2021, FBN Holdings Plc has attained 28.2% increase in gross revenue to ₦757.3 billion and profit before tax of ₦166.7 billion, an increase of 99.9%.
According to Dr. Adesola Adeduntan, Chief Executive Officer of FirstBank Group, the performance, “Following years of strategic restructuring of the Bank’s balance sheet and operations, the Commercial Banking business is beginning to transition into a sustained growth phase delivering performance commensurate to the size of our business and capabilities of our people. Profit before tax is up 77.9%, gross earnings 30.3%, total assets 15.9% and customer deposits up 19.5%.
The group hoped that this will further boost its market share in the industry, aid revenue diversification and support annuity income.
Adeduntan said, “We will continue to create quality loans with a focus on retail lending driven by technology as we continue to grow non-interest income to further diversify revenue.”
In 2021, FBNH operated in a challenging operating environment that was pressured by high inflation and currency devaluation, the effect of which increased operating expenses by 14.2% to ₦334.2 billion (Dec 2020: ₦292.5 billion).
However, this 14.2% is below the inflation level (Dec 2020: 15.6%) whilst regulatory costs also rose during the period, up 23.2% y-o-y. Despite the inflationary push factors, operating income grew 35.5% to ₦592.8 billion (Dec 2020: ₦437.6 billion), resulting in an improvement in cost to income ratio to 56.4% (Dec 2020: 66.8%).
Deposits from customers increased by 19.5% y-o-y to ₦5.9 trillion (Dec 2020: ₦4.9 trillion) reaffirming our strong market access and robust funding base. Our investment in agent banking, digitalisation and deployment of digital platforms which our customers have adopted, improved customer penetration and deepened our solid retail franchise. This continues to provide us with access to stable funding, reducing our cost of fund ratio to 2.1% (Dec 2020: 2.3%) while supporting the float of our current and savings account (CASA) at 91.2% (First Bank of Nigeria).
Total assets grew 16.2% y-o-y to ₦8.9trillion (Dec 2020: ₦7.7trillion) driven by a 30.0% y-o-y increase in customer loans and 26.3% increase y-o-y in investment securities. Cash and balances with Central Banks, loans to banks & customers and investment securities constitute 87.2% of total assets (Dec 2020: 83.4%).
“We continue to record progress in Asset Quality and Risk Management stemming from our retooled and strengthened risk management architecture. On the back of this, the non-performing loan ratio further declined to 6.1% (Dec 2020: 7.7%) while the coverage ratio improved to 62.2% (Dec 2020: 48.0%).” he said.
With a cleaner balance sheet and resilient earnings-generating capacity, FirstBank (Nigeria) was able to accrete capital buffers from organic earnings. Hence, despite the increase in loans and advances, Capital Adequacy Ratio (CAR) remained steady, marginally increasing to 17.4% (Dec 2020: 17.0%).
As a financial service holding company, driving synergies remains a critical part of its strategy and has been integrated into every aspect of its delivery model.
The group prides itself in the uniqueness of its diversified portfolio and the collaborative ecosystem that it has built around its lines of business, customers, and the unique value proposition that it delivers.
“We are also increasingly leveraging technology – artificial intelligence, robotics, and other next-generation technological advancements, to deepen collaboration and further drive operational efficiency across the Group.” Adeduntan added.
Gross earnings grew by 28.2% to ₦757.3 billion (Dec 2020: ₦590.7 billion) while interest income remained challenged given the moderated interest rate environment negatively impacting yields; as a result, interest income declined 4.1% to ₦369.0 billion (Dec 2020: ₦384.8 billion).
To mitigate the effect of the low-interest rate on investment securities and revenue generation, we remained deliberate with our intensified deposit mobilization and funding strategy to support enhanced loan growth at optimised rates leading to a 5.7% increase in interest expense to ₦140.8 billion (Dec 2020: ₦133.2 billion). As a result, net interest income declined by 9.3% to ₦228.2 billion (Dec 2020: ₦251.6 billion).
Conversely, non-interest revenue grew by 96.1% to ₦364.6 billion (Dec 2020: ₦185.9 billion) on the back of increased fees and commission income, treasury activities and other operating income. Additionally, and in line with our focus to further enhance our revenue generation capacity, First Pension Custodian Limited, a subsidiary of FBNHoldings’ flagship subsidiary, First Bank of Nigeria Limited, entered into a definitive agreement with Access Bank Plc for the planned acquisition of the entire share capital of Access Pension Fund Custodian Limited held by Access Bank Plc.
The 30.0% growth in loans and advances to ₦2.9 trillion and 16.2% growth in total asset to ₦8.9 trillion reaffirms our commitment to drive revenue and profitability as we complete the balance sheet clean-up.
Having achieved the intimidating result, the group in 2022, would be driving a strategic focus on revenue generation through digital channels and retail product offerings, further pushing its synergy potential as well as continuing to improve our operating model to deliver more efficiencies.
