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FBN Holdings Plc reported record full-year profit and revenue that whet investors’ appetite for more dividend as the lender benefited from improvement on yields on securities and loan expansion.
The strong performance across each of the segments comes amid rising challenging inflation as a weak Naira continues to undermine business and magnify hardship among Nigerians.
One of the largest banks in Nigeria saw profit upsurge by 127.42 percent to N310 billion or N8.63 per share, in the fourth quarter. That is up from N136.31 billion, or N3.79 per share, in the year ago.
The return on average equity (ROAE), a measure of profitability, rose to 23 percent in December 2o23 from 14.54 percent the previous year.
The growth at the bottom line (profit) was largely supported by fair value gain of N680.24 billion, which was significantly higher than 2022’s N22.40 billion.
This helped absorb N35.021 billion foreign exchange revaluation loss that would have damped profit and spook investors and shareholders.
Fair value gain is the increase in the value of an asset or liability based on the current market price or interest rate123. Fair value gain is reported in the income statement of the company and is a non-cash item.
Net interest income climbed 45.91 percent to N530.03 billion, predominantly boosted by higher rates at the Central Bank of Nigeria (CBN).
To strengthen its balance sheet for growth so as to take advantage of attractive business opportunities, the lender has embarked on a capital raising exercise.
The Bank has approved the management decision to raise N150 billion via a rights issue and also approved the N0.50 dividend payout for the 2022 financial year.
“All businesses are vulnerable to changes and we must build a strong capital so that our going concern will not be threatened,” said Nnamdi Okonkwo, Group Managing Director, FBN Holdings.
“Specifically, we need more capital to take advantage of attractive business opportunities which of course translates into profit and also be ready for Basel III that is expected to kick-in any moment from now. We also need to strengthen our balance sheet for growth. We wanted to make it clear that the capital raising exercise is for the interest of shareholders that your bank is fortified in terms of capital, ” said Okonkwo.
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