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FBNH has   released its Q1’18 results, posting weaker than expected performances across most line items. Particularly, Gross Earnings moderated 2% y/y to ₦139 billion – weaker than prior quarter’s ₦154 billion  . The unconvincing top line performance was driven by weaker than expected performances from both Interest and Non-Interest Income lines.

Whilst Non-Interest Income rose by a marginal 1% to ₦23.6 billion, the income line was 27% and 40% lower than  .  prior quarter’s ₦39.5 billion. Also, Interest Income moderated 3% y/y and 2% q/q to ₦111 billion –  . With Interest Expense        at ₦35.2 billion, Net Interest Income was down 6% y/y to ₦75.7 billion

In line with the trend observed across most banks in Q1’18,   analysts   expected the implementation of IFRS 9 to result in a significant one-time write off from earnings at the beginning of Q1’18 and a more tempered loan loss provision for the period. However, the initial application of IFRS 9 resulted in a more contained charge of ₦36.1 billion vs. the average ₦95.5 billion recorded by other tier 1 banks.

Consequently, FBNH reported a loan loss provision of ₦25.3 billion  against some analysts  ₦11.1 billion estimate. With this, Operating Income came in flat y/y at ₦74 billion –    . Furthermore, with Operating Expense coming in at ₦55.2 billion –    PBT was down 6% y/y to ₦18.8 billion  . Overall, PAT was down 9% y/y to ₦14.8 billion behind  some analysts  ₦35.2 billion estimate.





 Highlights of Vetiva Analyst Report
• Earnings lag estimates – PAT down 9% y/y
• Higher than expected loan loss provisioning drags bottom line
• Lower than expected one-time charge from IFRS 9 implementation
• Loan loss provision revised higher to reflect Q1’18 run rate

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