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Below is a detailed overview of the unaudited financial result of FBNH for 2023FY.

Interest Income & Non-Interest Revenue to the Rescue

FBNH released the unaudited Full-year results for 2023, revealing a respective 88.52% YoY and 129.41% increase in Gross earnings and Profit Before Tax (PBT). Major drivers for earnings growth include higher interest income (+66.27% YoY to NGN917.71bn) and non-interest income (+137.00% YoY to NGN599.66bn). PBT at NGN362.24bn exceeded our estimate due to outperformance in Gross earnings (2023FY actual; NGN1.52trn vs. 2023FY estimate; NGN1.27trn).  Elsewhere, Operating Expenses remained elevated, increasing by 46.83% YoY to NGN534.34bn, and this was a result of surging personnel cost (+48.15% YoY to NGN173.89bn), maintenance cost (+76.75% YoY to NGN75.94bn) and advertising and corporate promotions (+162.18% YoY to NGN31.81bn). Overall, Net Profit Margin jumped to 20.42% in the period from 16.93% in 2022FY.

We expect non- interest income to normalize in 2024 owing to the one-off effect of the FX liberalization policy. Also, the recent CBN policy restricting the banks to a 0% long position on FCY assets would limit FX gains recorded by the bank. However, we are positive regarding overall 2024FY performance as we foresee higher interest income underscored by elevated interest rate environment. Our 2024FY target price is currently under review.

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