- FBNH advances N12.2trn loan to customers in half year 2024
The Central Bank of Nigeria has auctioned a total sum of $876.26m to 26 qualified banks, who participated in the latest Retail Dutch Auction System undertaken by the apex bank.
The auction process conducted on Tuesday,was aimed to enhance FX liquidity in the market, alleviate demand pressure, and support price discovery in alignment with the apex bank’s objectives.
The CBN said this in a statement posted on its website on Wednesday. It was signed by the Director, Financial Markets Department, Omolara Omofunde Duke.
Explaining the auction process, the director said a total bid valued at $1.18bn was received from 32 authorized dealers’ banks while bids valued at $313.69m from six banks were disqualified.
Of the disqualified bids, four banks submitted their bids after the cut-off time of 3:00 pm, while two banks did not provide bids in the template submitted.
The statement read, “A total bid valued at US$1.18bn was received from 32 Authorized Dealers Banks, of which, bids valued at US$876.26m from 26 banks qualified, while bids valued at US$313.69m from six banks were disqualified.”
Last week, the CBN unveiled plans to implement a Retail Dutch Auction System to address the mounting unmet foreign exchange demand from end users.
It said the aim was to alleviate the growing pressure in the FX market and stabilize the naira’s exchange rate.
The naira has traded within the range of N1, 450 and N1, 600 in recent months.
However, the bank approved a cut-off rate of N1495/$ for the Retail Dutch Auction
FBNH advances N12.2trn loan to customers in half year 2024
Meanwhile, FBN Holdings Plc total loans and advances to its customers climbed by 45.6 percent from N8.4 trillion in FY-2023 to N12.2trn in H1-2024.
As a result, the Loan-to-Deposit Ratio (LDR) improved by 138bps to 68.9 percent, well above the Central Bank’s regulatory minimum of 65.0 percent.
Additionally, investment securities settled at N12.2trn in H1-2024, up 43.3 percent compared to the N8.4trn recorded in FY-2023.
The Group’s total assets expanded by 38.3 percent from N16.9 trillion in FY-2023 to N23.4tn in H1-2024, supported primarily by loan book growth.
Regarding asset quality, FBNH’s Non-Performing Loan ratio slightly improved to 4.2 percent in H1-2024 from 4.3 percent in the corresponding period of 2023. Impairment charges for the period climbed by 64.0 percent y/y to print at N93.0 billion, as the Group’s NPL coverage ratio printed at 96.5 percent (previously, 82.2% in H1-2023).
This implies that FBNH is making enough provisions for imminent bad loans. As a result, the Group’s Cost of Risk surged from 1.9 percent in H1-2023 to 2.3 percent in the period under review.
The shareholder’s fund of the Group grew by 26.7 percent y/y from N1.7trn in FY-2023 to N2.2trn in H1-2024 following improved business activities. Consequently, the Group’s Book Value Per Share (BVPS) rose to N61.7k in H1-2024 compared to its print of N38.4k a year ago.
Going forward, experts at United Capital Plc expect a sustained expansion in First Bank Nigeria Holdings Plc’s topline growth, following growth in interest and non-interest incomes.
“We anticipate that the elevated interest rate environment will keep supporting higher income earned on interest-bearing assets. Conversely, we note that this may result in higher interest expenses on customers’ deposits, thus weighing on the Group’s overall Net Interest Margin (NIM).
“Additionally, we expect sustained growth in the Group’s non-interest income in H2-2023, arising from higher returns on trading financial instruments despite FX losses. This will ensure overall profitability for First Bank Nigeria Holdings Plc. However, we note that challenges in the form of tough regulatory, monetary, and macroeconomic environments may serve as potential headwinds to the Group’s revenue growth. In addition, we expect rising inflationary pressures to continue to weigh on operational efficiency and overall profitability.”
On policy reforms, experts do not see the 70 percent windfall tax on bank’s FX gains impacting profitability negatively.
“We do not expect this to majorly impact on the Group’s profitability. This is hinged on the fact that the Group is currently incurring losses on FX, as evidenced in their result (H1-2024: -N165.0bn). This should imply that FBNH would not be charged on its losses,” they said.
It is believed that First Bank Nigeria Holdings Plc is well positioned (as seen in its H1-2024 results) to sustain the performance trend in its financial and non-financial metrics.
