FBN Holdings’ net interest income up 154% on rate hike

FBN Holdings recorded a 154.5 percent rise in net interest income, driven primarily by the continuous hike in the monetary policy rate (MPR) by the Central Bank of Nigeria (CBN).

The holding company’s unaudited financial statement for the year disclosed that its interest income rose to N1.39 trillion in 2024 from N546 billion in 2023.

The financial services group reached the revenue milestone riding on the wave of higher interest rates in Nigeria, which have risen 850 basis points to 27.50 percent in November, enabling lenders to charge more for loans.

Interest income calculated using the effective interest rate rose to N2,42 trillion from N936 billion while the holding company’s interest expense surged 164 percent to N1.03 trillion from N390 billion driven by the high-interest rate environment.

Analysts at CardinalStone research said in a notice that the group experienced a significant increase in interest income from loans and advances to customers, which rose by 123.7 percent as effective repricing of its risk assets bolstered asset yields.

Additionally, given the elevated fixed-income yields, FBNH increased its exposure to Nigerian Treasury bills (NTB) (+N2.1 trillion YoY), which aided in driving the 3.1x increase in interest income from investment securities.

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Data obtained from the Nigerian Exchange Limited revealed that FBN Holdings operating income for the period surged to N58.8 billion from N19.1 billion mainly driven by sundry income and recoveries during the period.

After-tax profit reported during the period rose by 138 percent to N738 billion from N318 billion.

FBN Holdings’ revenue from external customers arrived at N3.3 trillion which comprised commercial banking business group (N3.2 trillion), merchant banking and asset management business group (N100 billion) and others (N7 billion).

The holding company received N302 billion fee and commission income while N63.7 billion was incurred as fee and commission expense.

However, foreign exchange income dropped percent to N62.5 billion from N334 billion in the period reviewed. Net gains on sale of investment securities amounted to N40 billion, a 17.5 percent growth from N34 billion.

Dividend income grew by 71.9 percent to N9.8 billion in 2024 from N5.7 billion in 2023.

Furthermore, the analysis of the cash flows of the holding company reveals net cash flow generated from operating activities amounted to N1.57 trillion, up 36 percent from N1.16 trillion.

Net cash flow used in investing activities saw a turnaround amounting to N807 billion, from a loss of N317 billion in the period reviewed.

Net cash flow used in financing activities increased to N236 billion from a loss of N32.5 billion. Cash and cash equivalents rose to N5.2 trillion in 2024 from N2.6 trillion in the first quarter of 2023.