First Bank Nigeria Holdings (FBN Holdings) Plc’s profit growth was the best among peers in 2017, thanks to lower impairments, cost curtailments, and income from short term government securities.
FBN Holdings’ profit after tax surged by 226.80 percent to N40.11 billion in December 2017, the fastest bottom line growth in five years. See Chart.
This compares with the year on year (YOY) profit growth of Zenith Bank, (37.23 percent); United Bank for Africa (UBA), (8.75 percent); Guaranty Trust Bank (GTBank) Plc, (28.86 percent); Fidelity Bank Plc, (93.72 percent); Stanbic IBTC Holdings Plc, (69.63 percent); and Sterling Bank Plc; (65.03 percent), as shown in their 2017 audited financial statement.
On the flip side, Access Bank Plc recorded a 13.22 percent drop in net income, First City Monument Bank Plc, (-34.43 percent); and Wema Bank Plc, (-11.91 percent).
This means only three out of 10 banks under our coverage recorded a profit at the bottom lines (profit), signaling the gradual economic recovery is beginning to show face in their numbers.
For the year ended December 2017, after tax profits for the 10 lenders that have reported results spiked by 44.28 percent to N693.92 billion from N478.19 billion the previous year (2016).
For the full year period ending 2016 the 10 banks saw their profits increase by 21 percent, while there was a 12.32 percent decline in profits in 2015 a period when the sudden drop in crude oil prices from above a $100 per barrel to near $40 forced banks with heavy exposure to the sector to write off loans that began to go bad.
The unprecedented growth at the bottom line (profit) means these lenders have surmounted some of the issues that undermined earnings in the crisis period as a gradual economic recovery helped bolster earnings since customers are paying back some the money borrowed.
Also, some lenders have taken a haircut in 2016 on Non-Performing Loans (NPLs), a proactive strategy that validated their risk management strategy.
Between 2014 and 2015, the number of banks with NPL ratio in excess of the 5 percent threshold rose from 3 to 8.
Furthermore, NPL in 3 of these banks exceeded 10 percent, while NPLs rose in 18 of the 22 buckets into which the CBN classified Deposit Money Bank (DMB) lending.
FBN Holdings Plc’s share price closed at N22.12 as of Friday May 3, valuing it at N450.68 billion.
BALA AUGIE
