First Holdco Plc · NSENG:FIRSTHOLDCO
First Holdco — FBN Holdings — FY2018 & Q1 2019 Earnings Presentation
38 slides from First Holdco's earnings presentation, 2019
Slide 1: Investor & Analyst Presentation
Investor & Analyst Presentation For the full year ended 31 December 2018 & first quarter ended 31 March 2019
Slide 2: Disclaimer
DISCLAIMER This presentation is based on FBN Holdings Plc’s (‘FBNH’ or ‘FBNHoldings’ or the ‘Group’) audited financial statements for the twelve months ended 31 December, 2018 and the unaudited accounts for the three months ended 31 March, 2019. The Group’s Financial statements represents FBNHolding
Slide 3: Presentation Outline
PRESENTATION OUTLINE 04 Macro and Regulatory Updates 07 Group Strategy Update: The Journey So Far Our Commitments Delivered We Still have Work to Do 17 Performance Highlights 22 Risk Management 25 Outlook & Guidance 27 Appendix Financial Review Business Group Performance
Slide 4: Macro and Regulatory Updates
04 07 17 21 25 27 MACRO AND GROUP STRATEGY PERFORMANCE RISK OUTLOOK & REGULATORY UPDATE HIGHLIGHTS MANAGEMENT GUIDANCE APPENDIX UPDATES OUR COMMITMENTS FINANCIAL DELIVERED REVIEW WE STILL HAVE BUSINESS GROUP WORK TO DO PERFORMANCE
Slide 5: Challenging Macro-economic Environment
MACRO AND 5 REGULATORY UPDATES Challenging Macro-economic Environment IMPROVING GDP AS HEADLINE INFLATION MODERATES STEADY OIL PRICE AND PRODUCTION VOLUMES POSITIVELY IMPACTS EXTERNAL RESERVE POSITION 1.8 1.8 1.8 1.7 1.8 1.7 1.7 1.7 1.7 18.6 1.5 81.7 17.3 70.3 79.4 69.8 68.4 16.1 15.9 66.9 15.4 55.0
Slide 6: Recent Regulatory Developments
MACRO AND 6 REGULATORY UPDATES Recent Regulatory Developments Implementation of the CBN regulatory framework for CBN introduced guideline for licensing of Payment DMBs1 and mobile operators extended Service Banks Introduction of an automated Consumer Complaint PenCom introduced new RSA multi-fund st
Slide 7: Group Strategy Update
04 07 17 21 25 27 MACRO AND GROUP STRATEGY PERFORMANCE RISK OUTLOOK & REGULATORY UPDATE HIGHLIGHTS MANAGEMENT GUIDANCE APPENDIX UPDATES OUR COMMITMENTS FINANCIAL DELIVERED REVIEW WE STILL HAVE BUSINESS GROUP WORK TO DO PERFORMANCE
Slide 8: The Journey So Far
GROUP STRATEGY 8 UPDATE The Journey So Far Create digital competency to Deliver structural changes in enhance revenue and drive the risk taking culture and growth strengthen processes Operational Efficiency Sustain and elevate improvements in cost and capital efficiency KEY ENABLERS PEOPLE PROCESSES
Slide 9: Credit risk governance now operates at best-in-class standards
GROUP STRATEGY 9 UPDATE Credit risk governance in the Commercial Banking Group now operates at best-in-class standards, with vintage NPL <1% and overall Cost of Risk of 2.5% COST OF RISK (%) | COMMERCIAL BANKING GROUP COVERAGE RATIO (%) | COMMERCIAL BANKING GROUP 10.3 88.6 72.8 6.0 4.2 54.8 53.8 2.5
Slide 10: Undisputed leader in digital solutions and agency banking
GROUP STRATEGY 10 UPDATE Now the undisputed leader in digital solutions and agency banking, in Africa’s largest retail market. Our digital banking growth continues unabated with demonstrated track record of monetizing same GROWING REVENUE FROM DIGITAL BANKING CHANNELS USSD BANKING SCHEME MOBILE BANK
Slide 11: Excellent funding platform – low cost, diversified and stable
GROUP STRATEGY 11 UPDATE Excellent funding platform – low cost, diversified and stable. Low cost deposits at the Bank now account for 86% of our total deposits, providing outstanding resilience throughout all economic cycles FUNDING BY TYPE (NBN) | FBNHOLDINGS DEPOSITS BY TYPE (NBN) | FBNHOLDINGS •
Slide 12: Best-in-class capital management capability
GROUP STRATEGY 12 UPDATE Demonstrated best-in-class capital management capability. Restructured the balance sheet without shareholder dilutive impacts. Capital absorbency enhanced to support growth SIGNIFICANTLY IMPROVED NPL COVERAGE RATIO... …WHILE CAPITAL RATIOS REMAIN SUPPORTIVE OF GROWTH |FBNHOL
Slide 13: Now uniquely positioned for growth and value creation
GROUP STRATEGY 13 UPDATE Now uniquely positioned for growth and value creation LARGE AND GROWING ACCOUNTS BASE [MILLION] SURGE IN CUSTOMER ADOPTION OF OUR PAYMENT PLATFORMS USSD/ MOBILEBANKING PLATFORM [MILLION] 16.0 15.7 2.9 2.7 14.7 2.0 6.7 7.2 13.8 2.0 4.5 1.5 2016 2017 2018 Q1 2019 2016 2017 201
Slide 14: We Still Have Work to Do
04 07 17 21 25 27 MACRO AND GROUP STRATEGY PERFORMANCE RISK OUTLOOK & REGULATORY UPDATE HIGHLIGHTS MANAGEMENT GUIDANCE APPENDIX UPDATES OUR COMMITMENTS FINANCIAL DELIVERED REVIEW WE STILL HAVE BUSINESS GROUP WORK TO DO PERFORMANCE
Slide 15: Reining in costs while investing for the future
GROUP STRATEGY 15 UPDATE Reining in costs, even as we significantly invest for the future and book one-time charges on business restructuring programs. Improving efficiency will be a key priority over the coming quarters OPERATING EXPENSES FLAT QOQ DESPITE INFLATIONARY PRESSURE (₦’BILLION) |FBN HOLD
Slide 16: NPL management and additional capital buffers key priorities in 2019
GROUP STRATEGY 16 UPDATE NPL management and building additional capital buffers are also key priorities in 2019 Legacy NPL • NPL ratio at 25.9%1 exceeding guidance – IFRS 9 vs IAS 39 • Clear path to single digit NPL by Dec 2019 identified Capital Adequacy • Further buffer our capital cover • Continu
Slide 17: Performance Highlights
04 07 17 21 25 27 MACRO AND GROUP STRATEGY PERFORMANCE RISK OUTLOOK & REGULATORY UPDATE HIGHLIGHTS MANAGEMENT GUIDANCE APPENDIX UPDATES OUR COMMITMENTS FINANCIAL DELIVERED REVIEW WE STILL HAVE BUSINESS GROUP WORK TO DO PERFORMANCE
Slide 18: Financial and Operational Highlights for FY'18 & Q1'19
PERFORMANCE 18 HIGHLIGHTS Financial and Operational Highlights for FY’18 & Q1’19 - Sustainable Long-term Performance in Focus FY 2018 Q1 2019 • Profit before tax of N65.3 billion, up 19.7% y-o-y; Profit after tax up • Profit before tax of N19.3 billion, up 2.6% y-o-y; Profit after tax up 31.4% y-o-y
Slide 19: Improvement in Profitability despite Challenging Operating Environment
PERFORMANCE 19 HIGHLIGHTS Improvement in Profitability despite the Challenging Operating Environment Income Statement Snapshot (₦ billion) Statement of Financial Position (₦ billion) Gross Earnings Net Interest Income Impairment Charge for Non-Interest Income Total Assets Loans & Advances (net) Cred
Slide 20: Trend Analysis – Key Performance Indices
PERFORMANCE 20 HIGHLIGHTS Trend Analysis – Key Performance Indices Key Ratios (%) Key Ratios (%) Net Interest Margin Post Tax ROaA NPL Coverage Ratio Non-Performing Loans Gross Loans to Deposits Earnings Yield Post Tax ROaE 11.9 12.0 8.4 11.8 11.4 9.9 82.3 7.9 8.9 78.3 7.3 72.5 7.5 1.1 1.1 1.1 61.9
Slide 21: Risk Management
04 07 17 21 25 27 MACRO AND GROUP STRATEGY PERFORMANCE RISK OUTLOOK & REGULATORY UPDATE HIGHLIGHTS MANAGEMENT GUIDANCE APPENDIX UPDATES OUR COMMITMENTS FINANCIAL DELIVERED REVIEW WE STILL HAVE BUSINESS GROUP WORK TO DO PERFORMANCE
Slide 22: Sectoral Breakdown of Loans and Advances to Customers
RISK 22 MANAGEMENT Sectoral Breakdown of Loans and Advances to Customers Q1 19 FIRSTBANK (NIGERIA) GROSS LOANS BY SECTOR Q1 19 FBNQUEST MERCHANT BANK GROSS LOANS BY SECTOR • Selective expansion of the loan book within key sectors whilst resolving asset quality Agriculture 19.0% [21.3%] Manufacturing
Slide 23: Continuous Focus on Risk Management to Improve Credit Quality
RISK 23 MANAGEMENT Continuous Focus on Risk Management to Improve Credit Quality LOANS AND ADVANCES BY CURRENCY |FIRSTBANK (NIGERIA) LOANS AND ADVANCES BY TYPE |FIRSTBANK (NIGERIA) Q1 2019 LOANS AND ADVANCES BY MATURITY |FIRSTBANK (NIGERIA)
Slide 24: Improving Coverage Ratio
RISK 24 MANAGEMENT Improving Coverage Ratio NPL RATIOS | FBNHOLDINGS COST OF CREDIT RISK RATIO | FBNHOLDINGS Q1 19 NPL EXPOSURE BY SECTOR | FIRSTBANK (NIGERIA) Manufacturing 5.9% [6.1%] 82.3% 82.3% 78.5% 78.3% 6.4% 7.3% General Commerce 10.0% [9.4%] 68.2% 14.0% 61.9% 5.9% 3.4% Oil & Gas Upstream 50.
Slide 25: Outlook & Guidance
04 07 17 21 25 27 MACRO AND GROUP STRATEGY PERFORMANCE RISK OUTLOOK & REGULATORY UPDATE HIGHLIGHTS MANAGEMENT GUIDANCE APPENDIX UPDATES OUR COMMITMENTS FINANCIAL DELIVERED REVIEW WE STILL HAVE BUSINESS GROUP WORK TO DO PERFORMANCE
Slide 26: 2019 Guidance
OUTLOOK & 26 GUIDANCE 2019 Guidance FY 2019 FY 2018 FY 2018 Q1 2019 (Guidance) (Guidance) (Actual) (Actual) ROaE 12 – 14% 9 – 10% 9.9% 11.8% ROaA 1 – 1.5% 1 – 1.5% 1.1% 1.1% Profitability and efficiency metrics Cost to Income 58 - 62% ~58% 63.4% 68.2% Cost of Risk 3.5 – 4% 6 – 7% 3.5% 2.7% Cost of F
Slide 27: Financial Review
04 07 17 21 25 27 MACRO AND GROUP STRATEGY PERFORMANCE RISK OUTLOOK & REGULATORY UPDATE HIGHLIGHTS MANAGEMENT GUIDANCE APPENDIX UPDATES OUR COMMITMENTS FINANCIAL DELIVERED REVIEW WE STILL HAVE BUSINESS GROUP WORK TO DO PERFORMANCE
Slide 28: Evolution of Profitability
FINANCIAL 28 REVIEW Evolution of Profitability Y-o-Y 7.5% 8.8% 15.8% 6.5% 9.7% 25.6% 42.2% 19.7% 38.7% 31.4% FY 2018 (Nbn) 434.4 150.2 131.7 415.9 263.7 206.8 86.9 65.3 5.5 59.7 Interest income Interest expense Non-interest Net revenue1 Operating expenses PPOP1 Impairment Charge Profit before tax Ta
Slide 29: Headline Performance Driven by Growing Revenue from Digital Channels
FINANCIAL 29 REVIEW Headline Performance Driven by Growing Revenue from Digital Channels GROSS EARNINGS BREAKDOWN (Nbn)1 NET INTEREST MARGIN DRIVERS NON-INTEREST INCOME (NII) BREAKDOWN (Nbn) -2.0% y-o-y N114 N25 N61 N93 N132 N30 N595 N584 11.9% 12.0% 3% 6% 11.7% 11.4% 18% 12% 18% 18% 10.5% 10.7% 23%
Slide 30: Liquidity and Capital Positions Remain Adequate to Support Growth Plans
FINANCIAL 30 REVIEW Liquidity and Capital Positions Remain Adequate to Support Growth Plans BALANCE SHEET EFFICIENCY • Liquidity ratio remains healthy at 45.2% CAPITAL RATIOS | FIRSTBANK (NIGERIA) in FY 2018 and well above the 30% regulatory mark 72.5% 67.3% 67.0% 65.9% 59.3% 58.9% • FBNQuest Mercha
Slide 31: Business Group Performance
04 07 17 21 25 27 MACRO AND GROUP STRATEGY PERFORMANCE RISK OUTLOOK & REGULATORY UPDATE HIGHLIGHTS MANAGEMENT GUIDANCE APPENDIX UPDATES OUR COMMITMENTS FINANCIAL DELIVERED REVIEW WE STILL HAVE BUSINESS GROUP WORK TO DO PERFORMANCE
Slide 32: Commercial Banking Group – Executing the Enterprise Transformation Programme
BUSINESS GROUP 32 PERFORMANCE PERFORMANCE REVIEW Commercial Banking Group1 – Executing the Enterprise Transformation Programme KEY FINANCIAL HIGHLIGHTS KEY PERFORMANCE RATIO Income statement Return on Average Equity [%] Cost to Income [%] NPL Ratio [%] Nbn FY 17 FY 18 y-o-y % Q1 18 Q1 19 y-o-y % Gro
Slide 33: Merchant Banking and Asset Management Group
BUSINESS GROUP 33 PERFORMANCE PERFORMANCE REVIEW Merchant Banking and Asset Management Group1 – Deriving Benefits from a Diversified Business Model KEY FINANCIAL HIGHLIGHTS KEY PERFORMANCE RATIO Income statement Return on Average Equity [%] Cost to Income [%] Non-Performing Loan3 [%] Nmn FY 17 FY 18
Slide 34: Insurance Group
BUSINESS GROUP 34 PERFORMANCE PERFORMANCE REVIEW Insurance Group1 - Maintaining Market Positioning through Diversification of the Revenue Base KEY FINANCIAL HIGHLIGHTS KEY PERFORMANCE RATIO Income statement Return on Average Equity [%] Combined Ratio2 [%] Claims Ratio3 [%] • Return on Average Equity
Slide 35: Diversified Business Model
35 APPENDIX Diversified Business Model MERCHANT BANKING AND COMMERCIAL BANKING ASSET MANAGEMENT INSURANCE First Bank of Nigeria Limited FBNQuest Merchant Bank Limited FBN Insurance Limited • FBNBank (UK) Limited • FBNQuest Asset Management Limited FBN General Insurance Limited • FBNBank DRC Limite
Slide 36: Global Footprint
36 APPENDIX Global Footprint Nigeria France UK Ghana Guinea Senegal Name Name Name Name Name Name FBN Holdings Plc. FBNBank UK Ltd. FBNBank UK Ltd. FBNBank Ghana FBNBank Guinea FBNBank Senegal Type Type Type Type Type Type Licensed financial holding Bank branch Licensed bank Licensed Bank Licensed B
Slide 37: Definitions
37 APPENDIX Definitions ₋ Cost-to-income ratio computed as operating expenses divided by operating income ₋ Leverage ratio computed as total assets divided by total shareholders’ funds ₋ Loans to deposits ratio computed as gross loans divided by total customer deposits ₋ Net-interest margin computed
Slide 38: Contact Details
Contact Details Head, Investor Relations Tolulope Oluwole : Tolulope.O.Oluwole@fbnholdings.com : +234 (1) 905 2720 Investor Relations Team investor.relations@fbnholdings.com : +234 (1) 9051386 +234 (1) 9051086 +234 (1) 9051147 +234 (1) 9051146
FBN Holdings — FY2018 & Q1 2019 Earnings Presentation on 6ix