BusinessFBN Holdings Set For Robust Credit Expansion Amid Challenging Environment

FBN Holdings Set For Robust Credit Expansion Amid Challenging Environment

February 10, (THEWILL) – Navigating through an unprecedented challenging environment, FBN Holdings Plc, the parent company of the country’s oldest bank, FirstBank of Nigeria, is expanding its loan book to support the economy, data from its unaudited 2023 financial statements have shown.

The financial services behemoth which posted splendid results for its FY 2023 operations, grew its loan book by N2.57 trillion from N3.78 trillion in 2022 to N6.36 trillion in 2023, representing a 68 percent increase.

To guarantee effective implementation, the group posted a huge impairment charge of N200.44 billion in 2023 against N68.61 billion in 2022 – a difference of N131.83 billion or 192 percent increase. This provides full cover against the facilities which rose by only 68 percent during the year.

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“What FBN Holdings has done is a practical demonstration of its commitment to expand credit facilities to grow the economy. You can see its impressive performance in the prudential Loan-Deposit Ratio guideline of the Central Bank of Nigeria,” said Kunle Abimbola, an investment banker.

Abimbola, in a chat with THEWILL, stressed that the expanding loans and advances by FBN Holding, with a huge impairment provision against loss, puts the group in a good position. This will enable it to dish out high credit facilities to the real sector without fears of getting trapped in the miry clay of non-performing loans.

FBN Holdings Plc posted splendid results for its FY 2023 operations which reflect a growth trajectory that will excite the stakeholders. This is coming after a period of heavy-footed performance on huge non-performing loans some years back.

The group’s FY 2023 performance is reflective of its resilience and underpins the strategy to generate sustainable value for its stakeholders amid a huge foreign exchange loss of N350.31 billion compared to N22.39 billion in the previous year, representing a 1,464.5 percent rise.

Against the industry trend which saw many banks raking in massive gains from foreign exchange revaluation, FBN Holdings posted a huge loss (N350.31 billion). However the group’s windfall came from the significant earnings recorded in net gains on financial instruments which rose from N38.64 billion in 2022 to N681.23 billion in 2023, reflecting an increase of 1,663 percent.

FBN Holdings, in 2023, operated in a challenging operating environment that was pressured by high inflation and currency devaluation, the effect of which increased operating expenses by 41 percent to N325.74 billion from N218.48 billion.

Despite the inflationary push factors, profit after tax rose significantly to N309.88 billion from N136.17 billion in 2022, or 127.56 percent rise. This was in tandem with the growth trajectory recorded in the remarkable net interest income of N329.29 billion after impairment charges, compared with N294.63 billion in the previous year, or 11.7 percent increase.

This will enable it to navigate the recent policy by the Central Bank of Nigeria (CBN) on modified mechanism for the implementation of the cash reserve requirement (CRR) for all banks in the country which entails stepping up their loan facilities to the economy.

CRR is one of the monetary policy tools the apex bank adopts to help limit money circulation or supply in the economy to tackle banks’ liquidity flow challenges.

The CBN said the introduction of the new policy framework was to boost the capacity of the banks to plan, monitor and align their records with the apex bank to ensure a smooth handling of the persisting liquidity problem in the financial system.

With the persistent liquidity problems being experienced in the economy, the CRR, which stipulates the rate of cash reserve the banks are expected to hold with CBN for lending purposes, was 30 percent until July 2023 when it was adjusted to 32.5 percent to help mop up excess liquidity in the system.

The group’s assets which rose by 60 percent to N16.89 trillion from N10.57 trillion in 2022 was a component of the strong balance sheet that showed a remarkable rise in customers’ deposits to N10.87 trillion from N7.12 trillion in the previous year.

Electronic banking fees surged to N40.64 billion from N16.02 billion in 2022, reflecting a 163 percent increase as a result of huge investment in technology which helped in earning the group’s flagship subsidiary, FirstBank, the Best Corporate Bank at the recent prestigious Euromoney Awards for Excellence, Nigeria 2023.

A statement issued by Folake Ani-Mumuney, Group Head, Marketing and Corporate Communications, said the Bank clinched the coveted award based on its 130-year commitment to enabling its corporate customers achieve success through relevant and tailored financial solutions.

“FirstBank’s continuous investment in technology has been crucial to its leading industry role in optimally meeting the needs of its corporate customers. Recent investments in technology include the development of its smart and interactive Transaction Banking Platform known as FirstDirect2.0.

“FirstDirect2.0 provides a one-stop shop online banking platform for corporates, offering best-in-class capabilities such as Payments, Collections, and Account Services, and a locally focused phased implementation of Trade and Supply Chain Finance – a first for the Bank.

“The platform offers customers various solutions for corporate cash management (Payments, Collections and Liquidity Management). It will also deliver end-to-end trade solutions for corporate clients covering L/C creation, tracking, bidding and reconciliations.

“The Bank’s Corporate Banking model is focused on ensuring that its clients get the same quality of service across the Bank’s geographical locations. The execution of this approach through the deployment of the Global Account Management (GAM) Framework, implemented to enhance cross-relationship management tailored to Customers with a Pan African footprint,” the statement added.

Amongst other awards, FirstBank recently added to its awards kitty Best Corporate Bank Western Africa, 2023, by Global Banking and Finance; Best Internet Banking in Nigeria, 2023 by International Business Awards; the Most Innovative Banking Brand in Nigeria by Global Brands Awards as well as the Financial Institution of the Year 2023 by Afreximbank Pan-African Business and Development.

About the Author

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Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.

Sam Diala, THEWILLhttps://thewillnews.com
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.

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