First HoldCo Plc, the parent of First Bank of Nigeria, posted a 61% jump in nine-month pretax profit. Surging fee, trading and recovery income, along with lower loan-loss charges and tighter costs, made up for a drop in net interest income.
Profit before tax rose to N911.24 billion in the nine months to September, from N566.54 billion a year earlier, according to unaudited results filed with the Nigerian Exchange. Profit after tax climbed 65% to N744.45 billion. Earnings per share rose to N16.45 from N10.65.
Income Profile
The earnings growth did not come from core lending. Interest income fell 8.7% as yields came down after the central bank started cutting rates, while interest expense rose 5.2%. As a result, net interest income, the group’s biggest revenue line, dropped 16% to N1.26 trillion. In the third quarter alone, it fell 36% to N381 billion.
Other income more than filled the gap. Net fees and commissions rose 48% to N316.43 billion, and 84% in the third quarter. Gains on instruments held at fair value swung to N104.59 billion from a loss of N72.78 billion. Foreign exchange gains rose to N86.24 billion and gains on investment securities to N61.12 billion.
Other operating income jumped to N142.06 billion from N23.83 billion. Of that, N94.31 billion came from recoveries of debts previously written off. Excluding recoveries, pretax profit would still have risen about 44%, on MoneyCentral calculations.
Costs Retreat
Operating expenses fell 8.1% to N866.6 billion as advertising and promotions spending fell 65% to N42.26 billion, and other operating expenses fell 12.8%. The cost-to-income ratio improved to about 44% from 52%, on MoneyCentral calculations. The AMCON levy, a statutory charge banks pay to the government’s bad-debt agency, was little changed at N112.94 billion.
Impairment charges fell 28% to N207.1 billion, while the allowance held against defaulted (stage 3) loans fell to N84.17 billion from N218.81 billion in December.
Balance Sheet
Total assets grew 18% to N32.2 trillion from December. Customer deposits rose 21% to N22.91 trillion, while loans and advances to customers grew 4.8% to N9.39 trillion. That leaves a loan-to-deposit ratio of about 41%. The group put much of the extra liquidity into securities: investment securities rose 48% to N10.31 trillion, and assets held at fair value nearly doubled to N2.22 trillion. Borrowings fell 39% to N1.19 trillion.
Shareholders’ equity attributable to the parent rose 17% to N3.79 trillion. Retained earnings gained N734 billion, partly offset by falls of N124.9 billion in the foreign currency translation reserve and N104.6 billion in the fair value reserve. Annualised return on equity was about 28%, on MoneyCentral calculations.
Otedola Tightens Grip
FirstHoldCo Chairman Femi Otedola held 26.71% of the company shares at Sept. 30: 7.15% directly and 19.56% indirectly. A year earlier he held 16.1%. RC Investment Management, which the filing describes as an independent bridge holder, owns another 22.94%. Free float fell to 50.29% from 58.92%, while the number of shares in issue rose to 45.48 billion from 41.88 billion.
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