First Holdco Plc · NSENG:FIRSTHOLDCO
First Holdco — FBN Holdings — FY2016 and Q1 2017 Earnings Presentation
36 slides from First Holdco's earnings presentation, 2017
Slide 1: Investor & Analyst Presentation
Investor & Analyst Presentation Full year ended 31 December 2016 & first quarter ended 31 March 2017 1
Slide 2: Disclaimer
DISCLAIMER This presentation is based on FBN Holdings Plc’s (‘FBNH’ or ‘the company’ or the ‘Group’) audited results for the twelve months ended 31 December, 2016 and the unaudited results for the three months ended 31 March, 2017. Following the decisions to divest from FBN Mortgages Limited and Rai
Slide 3: Outline
Outline FY 2016 & Q1 2017 Key Highlights Pg 4-10 Financial Review Pg 11 - 16 Risk Management Pg 17 - 21 Strategy Pg 22 - 25 Outlook & Guidance Pg 26 - 30 Appendix Pg 32 - 36 3
Slide 4: FY 2016 & Q1 2017 Key Highlights
FY 2016 & Q1 2017 Key Highlights 4
Slide 5: Recessionary environment through 2016 with gradual recovery expected in 2017
Recessionary environment through 2016 with a gradual economic recovery expected in 2017 FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX Recessionary trend with rising inflation Improvement in crude oil price in 2016 External reserve (USDbillion) Crude oil
Slide 6: Regulatory intensity amidst challenging macro economic and operating environment
Regulatory intensity amidst challenging macro economic and operating environment FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX REGULATORY DEVELOPMENTS 2016 • Introduction of a current account maintenance fee following the discontinuation of the COT 1 •
Slide 7: Strong earnings in a challenging operating environment as we address legacy asset quality
Strong earnings in a challenging operating environment as we address legacy asset quality FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX INCOME STATEMENT KEY HIGHLIGHTS Gross Net interest Operating • Underlying business Profit before remains fundamentall
Slide 8: Improving performance at the core of building a solid foundation for the long term
Improving performance at the core of building a solid foundation for the long term FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX KEY RATIOS KEY HIGHLIGHTS • Improving cost efficiencies Cost to income with the scope for Liquidity ratio2 Cost of funds Pos
Slide 9: Portfolio diversification demonstrated through dividends from non commercial banking subsidiaries
Portfolio diversification demonstrated through dividends from non commercial banking subsidiaries FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX COMMERCIAL MERCHANT BANKING AND INSURANCE BANKING ASSET MANAGEMENT • FY 2016 gross earnings: N535.5bn (FY 201
Slide 10: Key themes impacting our business
Key themes impacting our business FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX 5 1 • Maintained an opex growth rate below 5 1 • Decline in international oil price inflation rate - a direct result of the constrained projected cash flows of effective cos
Slide 11: Financial Review
Financial Review FBNHoldings 11
Slide 12: FY 2016 & Q1 2017 results snapshot
FY 2016 & Q1 2017 results snapshot FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX Income statement Nbn FY 15 FY 16 y-o-y Q1 16 Q1 17 y-o-y Key ratios1 FY 15 FY 16 Q1 16 Q1 17 Gross earnings 502.7 581.8 15.7% 107.5 141.0 31.2% Net interest margin1 8.1% 8.
Slide 13: Maintained cost management drive amidst inflationary pressure
Maintained cost management drive amidst inflationary pressure FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX Operating expenses (Nbn) 60 N59.2 70% N57.5 58 N55.7 60% 61.6% 56 59.4% 53.3% 50% N53.4 Nbn 50.5% 54 N52.3 39.7% 40% N51.0 43.5% 52 30% 50 20% 48
Slide 14: Steady growth in assets through increased treasury activities
Steady growth in assets through increased treasury activities as we enhance revenue generating platforms FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX Net Interest Margin Drivers 14% 13.6% 13.2% 12.8% 14.4% 12.3% 12.1% 11.7% 13% 11.8% 10.6% 10.2% 11.7%
Slide 15: Strong and well diversified funding base with robust retail franchise
Strong and well diversified funding base with robust retail franchise FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX Funding by type Nbn Deposits by SBU Nbn 2 FBNHoldings FirstBank (Nigeria) Deposits from Banks Deposits from customers Financial investmen
Slide 16: Our liquidity position remains strong with improving efficiency in balance sheet management
Our liquidity position remains strong with improving efficiency in balance sheet management FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX Balance sheet efficiency Capital ratios FirstBank (Nigeria) and FBN Merchant Bank Total RWA (N'bn) Tier 1 capital r
Slide 17: Risk Management
Risk Management FBNHoldings 17
Slide 18: Sectoral breakdown of loans and advances to customers
Sectoral breakdown of loans and advances to customers FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX Q1 2017 FirstBank (Nigeria) gross loans by sectors Manufacturing 11.1% [10.6%] 5.1% 11.1% Construction 4.1% [4.1%] 1.2% 5.9% General commerce 3.5% [3.4%]
Slide 19: Profiling the loan book portfolio
Profiling the loan book portfolio FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX Loans and advances by maturity Loans and advances by type FirstBank (Nigeria) FirstBank (Nigeria) Overdrafts Term Loans Commercial loans 0 -30 days 1 - 3 months 3 - 6 months
Slide 20: Adequate provisioning on delinquent loans with revamped credit processes
Adequate provisioning on delinquent loans with revamped credit processes FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX Asset quality ratios - FBNHoldings NPL N’bn NPL coverage (including statutory credit reserve) Cost of risk NPL ratio N353.5bn N410.7bn
Slide 21: Transforming our risk management approach towards sustainable improvement in asset quality
Transforming our risk management approach towards sustainable improvement in asset quality FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX Further to our 2016 plan of revamping our risk management framework, key initiatives highlighted have been implement
Slide 22: Strategy
Strategy FBNHoldings 22
Slide 23: Aligning strategy to meet customers' needs
Aligning strategy to meet customers’ needs FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX Addressing the needs of our customers and stakeholders by: Driving operational Harnessing inherent Leveraging technological Improving risk governance efficiencies r
Slide 24: Simplified pathway to value creation
Simplified pathway to value creation FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX Deliver Maintain Create digital Enhance revenue competency to structural sustained growth across enhance revenue changes in the improvement of the organisation and servic
Slide 25: FBNHoldings at a glance
FBNHoldings at a glance FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX Rich Heritage 2,779ATMs Nigeria’s biggest and indigenous 7,048 POS financial institution with over 123 years in commercial banking 875 52.7% Largest distribution of alternative Only B
Slide 26: Outlook & Guidance
Outlook & Guidance FBNHoldings 26
Slide 27: Profitability and efficiency metrics
1 Outlook & Guidance FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX FY2016 FY2016 Q12017 2017 guidance (guidance) (actual) (actual) ROaE ≥10% 9-10% 3.0% 10.9% ROaA 1-1.5% 1.0-1.2% 0.4% 1.3% Cost to Income ≤55% 49-50% 47.0% 53.3% Profitability and efficie
Slide 28: Contact details
Contact details Ag. Head, Investor Relations Tolulope Oluwole Email: Tolulope.O.Oluwole@fbnholdings.com Phone: +234 (1) 9052720 Investor Relations Team investor.relations@fbnholdings.com Phone: +234 (1) 9051386 +234 (1) 9051086 +234 (1) 9051146 28
Slide 29: Appendix
Appendix FBNHoldings 29
Slide 30: Income statement evolution
Income statement evolution FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX FY 2016 (Nbn) Y-o-Y 2.6% 22.4% 14.8% 29.4% 0.8% 77.4% 90.3% 6.3% 3.9% 10.3% 165.5 469.9 220.9 405.3 100.8 249.0 226.0 23.0 5.8 17.1 1 Interest income Interest expense Non-interest
Slide 31: Revenue Generation
Revenue Generation FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX 1 Gross earningsbreakdown (Nbn) Net interest margin drivers Interest Income Non Interest Income Deposits cost Cost of funds Loan yield Asset yield Securities yield Net interest margin (NIM
Slide 32: Asset Diversification
Asset Diversification FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX FBNHoldings gross loans by business groups 1 FirstBank (Nigeria) & Subsidiaries gross loans) 2 Commercial Banking Merchant Banking & Asset Management FirstBank (Nigeria) FBNBank UK FBNB
Slide 33: Asset quality (1)
Asset quality (1) FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX FY 2016 NPL evolution - FirstBank (Nigeria) N212.8bn N-72.6bn N478.9bn N338.7bn Opening NPLs Newly Classified De-classified Closing NPLs Q1 2017 NPL ratio by sector - FirstBank (Nigeria) 1.
Slide 34: Asset quality (2)
Asset quality (2) FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX Oil & Gas NPLs NPLs by SBU Nbn FirstBank (Nigeria) FirstBank (Nigeria) Oil & Gas services Oil & Gas downstream Oil & Gas upstream Retail Banking Public Sector Institutional Banking Corporat
Slide 35: FBNHoldings' global footprint
FBNHoldings’ global footprint FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX Nigeria France Ghana Guinea Name Name Name Name FBN Holdings Plc. FBNBank UK Ltd. FBNBank Ghana FBNBank Guinea Type Type Type Type Licensed financial holding Bank branch License
Slide 36: Definition of terms
Definition of terms FY 2016 KEY HIGHLIGHTS FINANCIAL REVIEW RISK MANAGEMENT STRATEGY OUTLOOK & GUIDANCE APPENDIX ₋ 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
FBN Holdings — FY2016 and Q1 2017 Earnings Presentation on 6ix