First Holdco Plc · NSENG:FIRSTHOLDCO
First Holdco — FBN Holdings — FY2013 & Q1 2014 Earnings Presentation
42 slides from First Holdco's earnings presentation, 2014
Slide 1: Connected: Growth through connected solutions
Connected Growth through connected solutions Full year ended December 2013 & First Quarter ended March 2014 Investor & Analyst Presentation
Slide 2: Agenda
Overview & Operating Environment Pg 5 - 7 Pg 9 - 17 Financial Review Pg 18 - 22 Business Groups Pg 24 - 28 Strategy Pg 30 - 36 Summary/Outlook Pg 37 2
Slide 3: Disclaimer
DISCLAIMER This presentation is based on FBN Holdings Plc’s (‘FBNH’ or the ‘Group’ or ‘HoldCo’) audited IFRS results for the twelve months ended 31 December, 2013 and unaudited results for the three months ended 31 March, 2014. The Group's accounts have been prepared using the accounts of the subsid
Slide 4: Overview & Operating Environment
Overview & Operating Environment 4
Slide 5: Tougher regulatory environment impacting earnings despite fairly stable macroeconomic environment
Tougher regulatory environment impacting earnings despite fairly stable macroeconomic environment SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Macro Factors Impact on FBN Holdings • Global economic growth was revised to 2.9% as at October 2013, dipping by 0.3% in comp
Slide 6: Strong leadership position maintained
Strong leadership position maintained SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Strong local and growing international franchise underpin robust performance • Total assets of N3,871bn (+19.9% vs. 2012 ) for 2013, Q1 2014 N3,862bn ( +11.6% vs. Q1 2013). Gross loans
Slide 7: Tougher regulatory headwinds impact earnings
Tougher regulatory headwinds impact earnings SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Operating income (Nbn) Cost to income ratio 301.1 296.1 64.3% 62.5% 74.2% 69.7% 78.6 78.7 77.7 78.0 63.3% 66.0% 67.7 72.1 22.1% 58.2% 59.6% 52.1% 2012 2013 Q4 12 Q1 13 Q2 13 Q3 1
Slide 8: Financial Review
FBNHoldings Financial Review
Slide 9: FY 2013: Overview of income statement
FY 2013: Overview of income statement SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK • Gross earnings grew 7.0% y-o-y to N395.9bn in 2013, largely from interest income on Snapshot of Income Statement loans & advances to banks (+231.0%) and to customers (+9.9%). 3.3% Gro
Slide 10: FY 2013: Overview statement of financial position
FY 2013: Overview statement of financial position SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Snapshot: Statement of financial position Balance sheet structure - March 2014 (Nbn) N3,862 [N3,871] N3,862 [N3,871] FY 12 FY 13 y-o-y Q1 13 Q1 14 y-o-y q-o-q Other assets 3
Slide 11: Increased competition for cheap deposits with increase in CRR on public sector deposits
Increased competition for cheap deposits with increase in CRR on public sector deposits SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Deposits by SBU Nbn Deposits by type Nbn (First Bank of Nigeria only) Retail banking Private banking Corporate banking Commercial banki
Slide 12: Capital and liquidity levels within regulatory requirements
Capital and liquidity levels within regulatory requirements SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Components of capital (Nbn) Evolution of capital and liquidity ratios Tier 1 Capital Tier 2 Capital2 Total RWA (N'bn) Tier 1 capital ratio Total capital adequacy r
Slide 13: Evolution of FY 2013 profit after tax
Evolution of FY 2013 profit after tax (Nbn) SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK 9.6% 36.0% 9.3% 1.6% 4.4% 3.3% vs. FY FY 2012 FY 2013 2012 RoAE 19.0% 15.5% 323.6 RoAA 2.5% 2.0% 67.0 296.1 93.5 2.8% 20.9% 8.0% 61.8% 110.6 185.0 91.3 1.0 20.3 70.6 20.7 Interest
Slide 14: Evolution of Q1 2014 profit after tax
Evolution of Q1 2014 profit after tax (Nbn) SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK 6.4% 12.2% 14.7% 0.9% 12.3% 19.8% vs. FY Q1 2013 Q1 2014 2012 RoAE 22.3% 17.9% 81.5 RoAA 2.2% 2.9% 19.3 78.7 22.7 21.2% 53.7% 11.9% 1.4% nm 26.3 0.2 24.8 51.5 21.6 1.7 3.2 Interes
Slide 15: Gross earnings growth despite increasing regulatory headwinds
Gross earnings growth despite increasing regulatory headwinds SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Gross earnings (Nbn) Interest Income Non Interest income 1 • Gross earnings growth supported by higher interest income from loans & advances to banks and custome
Slide 16: Increasing pressure on NIMs resulting from regulatory headwinds
Increasing pressure on NIMs resulting from regulatory headwinds and compounded by the high interest environment SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Net interest margin (NIM)1 • NIMs at 8%, within guidance figure of 7.5% - 8.5% for FY 2013 • NIMs have been neg
Slide 17: Regulatory costs impact operating expenses
Regulatory costs impact operating expenses SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Net revenue and expenditure (Nbn) • 12.3% increase in Q1 2014 opex was driven by: Net revenue Operating expenses Cost to Income Ratio ― higher regulatory costs (+31%), staff cost (
Slide 18: Growing loan book will support long term growth agenda
Growing loan book will support long term growth agenda SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Interest earning assets mix (Nbn) FBN Holdings gross loans (Nbn) Interbank AFS-Treasury Bills Net Loans and Overdraft Bonds and HTM Treasury Bills FirstBank Other entit
Slide 19: First Bank of Nigeria (Loan book breakdown)
First Bank of Nigeria (Loan book breakdown) SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Breakdown of loans by SBU Loan Breakdown by Sectors Institutional banking Retail banking Public sector Power and Energy 3% 6 Corporate banking Commercial Banking Private banking (
Slide 20: FBN UK records improved performance in spite of tough regulatory framework
FBN UK records improved performance in spite of tough regulatory framework SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Selected financial summary Loan book by sector N‘bn FY 12 FY 13 y-o-y Q1 13 Q1 14 y-o-y Oil & gas 28.4% [20.1%] Real estate Gross Earnings 19,531.1
Slide 21: Proactive portfolio management provides downside protection
Proactive portfolio management provides downside protection SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK NPLs sector exposure Asset quality (First Bank of Nigeria only) NPL N’bn NPL coverage (including statutory credit reserve) General* 32.5% NPL coverage (excluding s
Slide 22: Early recognition of impaired assets results in earlier remedial action
Early recognition of impaired assets resorts in earlier remedial action SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Allowance for impairments Nbn (First Bank of Nigeria only) Evolution of credit impairments Impairment charge (N'bn) Cost of risk PPOP/credit impairment
Slide 23: Performance Review - Business Groups
Performance Review - Business Groups Commercial Banking Investment Banking & Asset Management Insurance & Microfinance 23
Slide 24: Commercial Banking - Resilient performance despite significant pressures
Commercial Banking- Resilient performance despite significant pressures SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Gross earnings – (Nbn) Twelve months 2013: • Gross earnings growth of 9.9% y-o-y N372.6bn (N338.9bn: FY 2012) recorded on the +10% +1% back of a 12% in
Slide 25: Commercial Banking group – contd
Commercial Banking group – contd’ SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK • The commercial banking business witnessed significant regulatory headwinds during the period, challenging the business model • In spite of the challenging year, the business delivered not
Slide 26: IBAM – Increased profitability with a positive outlook
IBAM – Increased profitability with a positive outlook SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Gross earnings – (Nbn) Twelve months 2013 : • FY Gross earnings and PBT have grown by 19% and 65% respectively y-o-y +46% • Performance was driven by a strong rebound i
Slide 27: Insurance Group – Repositioning to capture greater market share
Insurance Group – Repositioning to capture greater market share underpins strong growth SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Gross income – (Nmn) Twelve months 2013: • Gross income declined 13% y-o-y in 2013 to N3.4bn (FY 2012: N4.0bn) • Claims of N778mn were
Slide 28: Microfinance - Overview
Microfinance - Overview SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Gross earnings – (Nmn) Twelve months 2013: • FBN Microfinance (FBNM) recorded Gross earnings and PBT of -7% +9% N1,108mn and N64mn respectively (FY 2012: N1,192mn and 1,192 272.7 N317mn) driven by su
Slide 29: Strategy
Strategy FBNHoldings 29
Slide 30: 2013 strategy focused on embedding new structures to drive longer term growth
2013 strategy focused on embedding new structures to drive longer term growth & profitability SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK 1 Business Line Expansion 3 International Expansion • Improved specialization and deeper capabilities across the business groups;
Slide 31: Impressive 5-year performance
Impressive 5 – year performance SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Business Growth, 2009 - 2013 CAGR Deposits 2.9 +22% 1.3 1.4 2.0 2.4 NGN Trl Loans 1.5 1.8 +13% Significantt revenue 1.1 1.2 1.3 NGN Trl loss due to CBN policy changes (tariff / charges, CRR,
Slide 32: Significant growth in last cycle but unexpected policy changes presented challenges
Recorded significant growth during the last cycle but unexpected policy changes presented challenges in meeting 2013 targets SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Summary of industry policy changes Balance Sheet-related – Upward review of savings interest rat
Slide 33: The 2014-2016 Group strategic framework features three key themes
The 2014-2016 Group strategic framework features three key themes SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK To become the pre-eminent financial services group in Middle Africa, providing value to our customers and distinctive returns to our shareholders 1 2 3 Theme
Slide 34: 2014-2016 Bank Strategic Initiatives
2014-2016 Bank Strategic Initiatives SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Expected areas of impact Decrease branch congestion and increase cross-sell leads; Focus on transaction migration, • Self-service rate Branch shorter TAT, and improved sales capabiliti
Slide 35: Commercial Banking Group – Business Updates
Commercial Banking Group – Business Updates SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Four additional Bank initiatives have been prioritized for 2014 2014 Priority Bank Strategic Initiatives Expected areas of impact Leverage enhanced retail banking platform to in
Slide 36: Expanded our portfolio to cover strategic geographies
Expanded our portfolio to cover strategic geographies and will increasingly shift our emphasis to integration and synergy capture SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK Global Footprint United Arab Emirates China France • Name First Bank of Nigeria • Name First
Slide 37: Outlook
Outlook SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK • Enhancing revenue streams through: - diversification of earnings from broader jurisdictions reducing country specific risk towards creating further value to shareholders - driving cross-sell and synergy realisatio
Slide 38: Contact Details
Contact Details Head, Investor Relations Oluyemisi Lanre-Phillips Email: oluyemisi.lanre-phillips@fbnholdings.com Phone: +234 (1) 9052720 Investor Relations Team investor.relations@fbnholdings.com Phone: +234 (1) 9051146-7 38
Slide 39: Appendix
Appendix FBNHoldings 39
Slide 40: Deliberate and measured loan growth as asset quality remains a priority
Deliberate and measured loan growth as asset quality remains a priority….. OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY SUMMARY/ APPENDIX OUTLOOK Loans and advances by maturity Loans and advances by type (First Bank of Nigeria only) (First Bank of Nigeria only) Overdrafts Term Loans Commercial
Slide 41: Diversified Group with growing international presence
Diversified Group with growing international presence SUMMARY/ OVERVIEW FINANCIAL REVIEW BUSINESS GROUPS STRATEGY APPENDIX OUTLOOK FBN Holdings PLC First Bank of Nigeria FBN Life Assurance FBN Microfinance Bank FBN Capital Limited Limited Limited Limited First Pension Custodian Limited First Trustee
Slide 42: GDR Programme
GDR Programme First Bank of Nigeria has a Sponsored Regulation S Global Depositary Receipt (RegS GDR) program Ticker symbol: 999112Z LI CUSIP: 31925X302 ISIN: US31925X3026 Ratio: 1 GDR : 50 Ordinary Shares Depositary bank: Deutsche Bank Trust Company Americas Depositary bank contact: Sta
FBN Holdings — FY2013 & Q1 2014 Earnings Presentation on 6ix