MON, APRIL 15 2019-theG&BJournal- Improvement in unpaid loans spurred First Bank Holdings Plc to growth as profit hit three year high, a stellar performance that signals the lender is gradually weathering the storm of macroeconomic headwinds.
For the year ended December 2018, First Bank’s net income increased by 58.24 percent to N59.66 billion, this compares with N12.24 billion recorded in 2016 when a precipitous drop in crude price hindered customers from honouring their obligations.
The growth in profit was due to a 42.21 percent reduction loan loss expense to N86.91 billion as at December 2018, while asset quality has been improving since the central bank introduced the foreign exchange system-in 2017- that ended a crippling dollar shortage.
However, the volatility in the short term government securities delt a blow on the lenders’ top lines (revenue) as interest income fell by 7.75 percent to N434.40 billion as at December 2018 from N469.58 billion the previous year.
Banks in Africa’s largest economy have been leveraging on a high yield environment to grow profit and deliver a high returns to shareholders as they’ve refused to turn on the tap of lending to the real economy.
For instance, First Bank made N121.84 billion in investment securities in 2018, a reduction of 20.30 percent to N151.89 billion recorded the previous year.
Analysts are of the view that even at 10 percent yields on treasury bills, Banks will continue to make money and stay afloat.
First Bank’s investment in digital technology has yielded fruit as fees and commission income increased by 24.53 percent to N92.72 billion in December 2018 as against N74.45 billion as at December 2017.
Return on equity (ROE) jumped to 11.24 percent in December 2018 from 5.59 percent the previous year. This means the lender has been consistently utilizing owners’ assets in generating higher profit.
First Bank’s shares closed at N7.80 as of 2:00 pm Lagos time, valuing it at N269.21 billion.
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