The Group managing Director of First bank Holdings Plc, the parent company of First Bank has declared that the group surpassed stakeholders’ expectations in the 2023 Financial year.
Okonkwo was reacting to the Group last year’s Financial report ending December 2023 submitted to the Nigeria Exchange, NGX, and other regulators in the country.
“We are committed to further enhancing revenue and profitability by leveraging technology, strengthening our value proposition, refining our governance model, and maximising operational efficiencies. In the face of the increasingly competitive environment, we maintain a forward-looking approach, with a clear aim to build a sustainable institution. Our disciplined execution of strategic initiatives positions the Group for improved profitability, excellence in performance, and surpassing stakeholders’ expectations,” he said.
He’s right considering that gross earnings grew 95.7 percent year- on -year, yoy, to N1.6 trillion, while profit before tax, PBT increased by 127.3 percent year-on-year, yoy, to N358.9 billion.
The group has been able to sustain its performance trajectory despite the challenging macroeconomic landscape, analysts say.
Group financial review
Gross earnings grew by 95.7 percent to ₦1.6 trillion (Dec 2022: ₦815.2 billion). This was driven by a 74 percent y-o-y growth in interest income to ₦960.3 billion (Dec 2022: ₦551.9 billion), which represents 60.2 percent of gross earnings. The growth in interest income was underpinned by the strong rate environment which resulted in an increase in earning yields to 10.7 percent from 8.8 percent in the prior year. Likewise, net interest margin improved to 6.1 percent from 5.8 percent in 2022.
Relatedly and in line with the focus of driving transaction-based offerings, non-interest income grew 153.6 percent y-o-y to ₦601.7 billion. This includes trading and mark to market income of N382.7 billion. Excluding this, non-interest revenue was up 52.4 percent y-o-y to ₦219.0 billion (Dec 2022: ₦143.7 billion). This was primarily driven by 63.8 percent y-o-y growth in net fee and commission income – underscoring the strength of our core banking and related offerings.
The underlying drivers of fees and commission were led by electronic banking fees (+20.4 percent) to ₦66.3 billion, Letters of credit commission and fees (+278.4 percent) to ₦60.6 billion, Account maintenance fees (+12.3 percent) to ₦22.3 billion, and funds transfer and intermediation fees (+204.9 percent) to ₦20.6 billion. Excluding trading and mark to market income, Net fees and commission continue to drive transaction-based income, contributing 88.2 percent (2022: 82.1 percent) to non-interest income, propelled by further improving transaction volumes while optimizing digital products offerings and delivery models.
Operating income increased by 91.5 percent on account of strong earnings that offset the growth in operating expenses. As a result, the cost to income ratio improved to 49.1 percent (Dec 2022: 61.7 percent). Cost management continues to remain a key priority as we focus on further improving efficiency.
Deposit from customers increased by 49.7 percent to ₦10.7 trillion (Dec 2022: ₦7.1 trillion). Deposits continues to comprise low-cost funds, with current and savings accounts making up 92.1 percent (for FirstBank of Nigeria) of total deposits from 91.9 percent in the prior year. However, given the high interest rate environment and the increase in monetary policy rate, cost of funds increased to 3.7 percent (Dec 2022: 2.3 percent).
Customer acquisition drive has also been enhanced through a growing adoption across digital platforms and greater penetration of the unbanked segments through the agency banking network, further boosting financial inclusion drive.
Total assets grew by 60.1 percent to ₦16.9 trillion (Dec 2022: ₦10.6 trillion) on the back of a 67.8 percent y-o-y increase in customer loans and 20.5 percent y-o-y growth in investment securities, thus enhancing our earning capabilities and overall asset position.
Gross loans improved by 68.8 percent to ₦6.6 trillion (Dec 2022: ₦3.9 trillion) due to growth in lending and benefiting from the increase in foreign currency loans following devaluation of the currency. Despite the volatile business environment, NPL ratio remained well within the regulatory threshold at 4.7 percent, while coverage ratio further improved from 80.5 percent in 2022 to a solid at 91.7 percent, thereby sustaining the overall strong asset quality profile of the portfolio – this remains a top priority.
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