Earnings Update: FBNH Plc Q3 2024 – Positioned for Sustained Growth.

Event

As anticipated, FBN Holdings Plc (“The Group”) capitalised on the rising yields in the environment, driving impressive earnings growth. Total interest income surged by 179% year-on-year to N685.32bn, primarily fueled by higher income from loans and advances. The Group’s average loan book saw a 75% increase, reaching N8.00trn in 9M 2024, up from N4.57trn in 9M 2023. The expansion in both loan volumes and yields played a pivotal role in the robust growth of interest income in Q3 2024.

We observed a notable surge in loans and advances to banks across the banking sector, with FBN Holding also experiencing significant growth. On a year-on-year basis, loans and advances to banks increased by 108%, rising from N1.61trn to N3.35trn. As a result, income from these loans skyrocketed by 590%, reaching N107.29bn in Q3 2024, up from N15.55bn in Q3 2023.

The sharp increase in interbank lending reflects broader liquidity challenges within the banking sector, driven by the Central Bank’s hawkish stance on interest rates and inflation control. This environment pushed banks to rely more on short-term funding from their peers, resulting in substantial growth in both their loan books and interest income.

Outlook

In light of a robust financial performance in Q3 2024, we revised our fair value estimate to N32.05 from N28.93, while reaffirming our BUY recommendation on the stock. At the current market price of N27.60, the stock is trading at a 21% discount to our revised fair value, presenting a compelling investment opportunity.

Please follow the link “FBNH Plc Q3 2024 – Positioned for Sustained Growth” to view the whole report.           

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