FBN Holdings’ nine-month profit more than doubles to N534 billion

FBN Holdings reported a 125.8 per cent rise in net profit in the nine months to September, helped by a series of interest rate hikes by the Central Bank of Nigeria that allows lenders to charge more for loans.

The financial services group earned 164.6 per cent more in interest income compared to the same period of last year, its financial report issued on Tuesday showed.

Net interest income, a key performance metric which indicates the difference between what banks generate from loan-bearing assets and what they pay to depositors, climbed to N873.9 billion from N375.5 billion.

Monetary authorities in Nigeria have raised borrowing by 15.8 per cent over thirteen consecutive meetings since May 2022 in order to arrest the country’s defiant inflation, which has stoked a cost of living crisis among residents.

While that has worsened the ordeal of businesses, especially manufacturers, it continues to open up opportunities for lenders by allowing them to grant loans at pretty high rates.

Credit quality was a major concern for the group during the period as the cash FBN Holdings set aside to cover problem loans jumped sharply to N171.4 billion, implying a 111.4 per cent surge compared to the same period of last year.

The corporation incurred a foreign exchange loss of N226.7 billion, compared to N97.4 billion a year ago in the period under review.

Net gains from financial instruments at fair value through profit and loss surged 125.8 per cent to N551.8 billion, boosting operating profit.

Profit before tax was up by 128 per cent at N610.9 billion, while profit after tax increased by N533.9 per cent from N236.4 billion a year ago.

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FBN Holdings has initiated a rights issue through which it expects to generate N150 billion being part of the plan to meet the conditions for bank recapitalisation exercise in Nigeria, which requires lenders with international authorisation to ramp up their capital base to at least half a trillion naira.

Last month, the group sold its merchant banking business FBNQuest Merchant Bank Limited to EverQuest acquisition LLP, a consortium comprising Custodian Investments, Aion Investments and Evercorp Industries.