First Bank alerts on dwindling earnings

In from Ripples Nigeria . . .

The management of FBN Holdings Plc, the holding company for First Bank of Nigeria and its former subsidiaries, has alerted the investing public that the group’s earnings for the immediate past business year would be significantly lower than the previous year. FBN Holdings’ share price dropped by 4.41 per cent to close yesterday at the NSE at N3.47 per share.

In a profit warning issued at the Nigerian Stock Exchange (NSE) today, FBN Holdings stated that preliminary review of its management account for the business year ended December 31, 2015 has shown that investors should expect “that earnings will be materially below that of the prior year”.

The holding company said the reduction in earnings was due to the recognition of impairment charges on some specific accounts resulting from a reassessment of the loan portfolio within the group’s commercial banking business.

It noted that the reassessment was driven by the challenging macro environment, coupled with fiscal and monetary headwinds which have resulted in marked reduction in domestic output.

“This is a prudent measure being taken while the bank has commenced active remedial action on the specific impaired accounts. Our merchant banking and asset management as well as insurance business remain strong and resilient,” the group said.

Read also: Banks’ fear grips investors as equities drop further

The management of the group however reaffirmed that it would focus in 2016 on restoring shareholder value by driving improvements in underlying asset quality, cost efficiency, enhancing revenue generation and extracting synergies across the group, as well as growth through innovation.

Audited report and accounts of FBN Holdings for the year ended December 31, 2014 had shown that gross earnings rose by 21.3 per cent to N480.6 billion in 2014 compared with N396.2 billion in 2013. Interest income had grown by 12 per cent from N323.6 billion to N362.6 billion. Net interest income rose to N243.9 billion in contrast with N230.1 billion recorded in previous year. Profit before tax rose marginally from N91.3 billion to N92.9 billion. Profit after tax also grew by 17.3 per cent from N70.6 billion to N82.8 billion.

With these, earnings per share had improved from N2.16 in 2013 to N2.55 in 2014, representing an increase of 18 per cent. Total assets rose by 12.1 per cent from N3.87 trillion in 2013 to N4.34 trillion in 2014. Shareholders’ funds improved by 10.8 per cent from N471.78 billion to N522.89 billion.

FBN Holdings distributed a bonus share of one new share for every 10 shares already held and a dividend per share of 10 kobo for the 2014 business year.

 

 

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