FBN Holdings, Nigeria’s Biggest Financial Services Group Hurting But Still Profitable

FBN Holdings

FBN Holding, Nigeria and West, East and Central Africa’s largest financial services group just released its Q1 2016 earning report and the bank is…

Based on its disclosure to the Nigeria Stock Exchange, NSE, FBN Holdings’ net revenue slightly fell to 20 billion compared to it 22 billion. This represent a 9% fall year-on-year comparison.

It is a no-brainer that the crash in the global crude oil market will take a toll on the bank financing most of the major oil companies.

The group’s gross interest revenue fell to 83 billion compared to 95 billion it recorded in the same quarter last year. That is a drop of 12% year on year. However, the company made a great effort to cut down its lending expenses and perhaps because it was deleveraging, its interest expenditure fell to NGN 19 billion compared to NGN 39 billion it booked within the same quarter, that is a 40% decrease.

The group did suffer huge impairments in its loan. It was actually reported that First Bank was exposed to 25% of the total loans given to oil majors. It is a no-brainer that the crash in the global crude oil market will take a toll on the bank financing most of the major oil companies. In Q1, FBN Holding suffered NGN 12.7 billion impairment losses compared to 4 billion its suffered within the same quarter last year, a +217.5% percentage increase.

The group’s insurance premium did fall slightly from NGN 1.8 billion the same quarter last year to NGN 1.8 billion. The bank’s fees and income is the biggest in the industry and it did grow marginally from NGN 15 billion to NGN 16 billion the same quarter this year. It is expected that the drought of Forex will hurt the biggest player. The bank’s margin on Forex fell from NGN 9.7 billion to 1.3 year on year comparison, an 87% decrease. It gains from investment securities gives the group something to cheer about with an increase from NGN 163 million to NGN 3.6 billion year on year comparison, over 400% increase year on year.

FBN Holding Shares
Source: Bloomberg

FBN Holding has First Bank Limited, FBN Quest, its investment arm that provides specialized financial services including investment banking, asset management, securities trading, insurance and other financial services. FBN Holding has a net asset of NGN 4.3 trillion with over 7 million active banking customers.

Close to the time the result was to be released, shares of FBN Holding fell sharply, but regained its position after investors released the company did not really do badly looking at its fundamentals. Analysts hold the belief that FBN Holding’s stock price is still undervalued.


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