First Holdco Plc · NSENG:FIRSTHOLDCO
First Holdco — FBN Holdings — H1 2019 Earnings Presentation
30 slides from First Holdco's earnings presentation, Jun 30, 2019
Slide 1: Investor & Analyst Presentation
Investor & Analyst Presentation For the six months ended 30 June 2019
Slide 2: Disclaimer
DISCLAIMER This presentation is based on FBN Holdings Plc’s (‘FBNH’ or ‘FBNHoldings’ or the ‘Group’) unaudited financial statements for the six months ended 30 June, 2019. The Group’s Financial statements and the information provided in this presentation, represent FBNHoldings Plc and its subsidiari
Slide 3: Presentation Outline
PRESENTATION OUTLINE 04 Performance Highlights 07 Macro and Regulatory Updates 10 Group Strategy Update 18 Risk Management 22 Appendix
Slide 4: Performance Highlights
04 07 10 18 22 PERFORMANCE MACRO AND GROUP STRATEGY RISK HIGHLIGHTS REGULATORY UPDATE MANAGEMENT APPENDIX UPDATES
Slide 5: Focused on sustainable long-term performance
PERFORMANCE 5 HIGHLIGHTS Focused on sustainable long-term performance Key highlights • Significant improvement in asset quality with Atlantic Energy fully written-off • Non-performing loans down to 14.5% as at June 2019 from 25.9% as at December 2018 • Credit impairment charge down 58.1% y-o-y to N2
Slide 6: Improving performance resulting from recent strategic initiatives
PERFORMANCE 6 HIGHLIGHTS Improving performance resulting from recent strategic initiatives Key Income Statement Ratios (%) Key Balance Sheet Ratios (%) Net Interest Margin Post Tax ROaA Non-Performing Loans NPL Coverage Ratio Gross Loans to Deposits1 Earnings Yield Post Tax ROaE 11.7 1.3 10.7 11.6 1
Slide 7: Macro and Regulatory Updates
04 07 10 18 22 PERFORMANCE MACRO AND GROUP STRATEGY RISK HIGHLIGHTS REGULATORY UPDATE MANAGEMENT APPENDIX UPDATES
Slide 8: Macro-economic challenges remain with a decline in GDP but external reserve strengthens
MACRO AND 8 REGULATORY UPDATES Macro-economic challenges remain with a decline in GDP but external reserve strengthens HEADLINE INFLATION MODERATES AS GDP GROWTH STAGNATES EXTERNAL RESERVES SUPPORTED BY THE INCREASE IN OIL PRODUCTION VOLUME 1.7 1.9 1.7 16.1 15.9 1.8 1.8 1.8 15.4 1.7 1.8 1.7 13.3 32.
Slide 9: Recent regulatory developments
MACRO AND 9 REGULATORY UPDATES Recent regulatory developments CBN establishes the Shared Agent CBN1 issues guidelines Network Expansion on managing credit Facility to support concentration, interest financial inclusion CBN unveils 2019 – 2024 rate and reputational drive strategic focus risk (Pillar
Slide 10: Group Strategy Update
04 07 10 18 22 PERFORMANCE MACRO AND GROUP STRATEGY RISK HIGHLIGHTS REGULATORY UPDATE MANAGEMENT APPENDIX UPDATES
Slide 11: Successfully delivering on our commitments
GROUP STRATEGY 11 UPDATE Successfully delivering on our commitments Significant improvement in asset quality Increasingly a transaction-led Group ✓ Driving transaction led earnings growth ✓ Fully written off Atlantic Energy (Largest legacy NPL) ✓ Increased revenue from Electronic Banking income, now
Slide 12: Significant asset quality improvement; NPL ratio down to 14.5%, Cost of risk at 2.2%
12 Significant asset quality improvement; NPL ratio down to 14.5%, Cost of risk at 2.2% ON TRACK TO A SINGLE DIGIT NPL RATIO (%) | FBNHOLDINGS COST OF RISK (%) | FBNHOLDINGS 25.9 25.3 4.7 4.5 3.5 14.5 2.7 2.2 <10.0 FY 18 Q1 19 H1 19 FY 19e H1 18 9M 18 FY 18 Q1 19 H1 19 • On course to achieving a sin
Slide 13: Undisputed industry leader in agency and digital banking
GROUP STRATEGY 13 UPDATE Undisputed industry leader in agency and digital banking reinforced by increasing customer adoptions Firstmonie Agent Banking Scheme • Positioned for strong and sustainable non-interest revenue growth • Driving enhanced customer acquisitions and experience, transaction inten
Slide 14: Increasingly a transaction-led Group, uniquely positioned for growth
GROUP STRATEGY 14 UPDATE Increasingly a transaction-led Group, and uniquely positioned for growth and earnings accretion GROWING REVENUE FROM DIGITAL BANKING CHANNELS | (E- BUSINESS CONTRIBUTION TO NON INTEREST REVENUE) H1 19 34.4% FY 18 25.8% H1 18 24.3% FY 17 22.0% USSD BANKING SCHEME | TRANSACTIO
Slide 15: Marked improvement in asset quality, capital cover and balance sheet optimisation
GROUP STRATEGY 15 UPDATE Marked improvement in asset quality, with NPL% sharply trending downwards. Capital cover, balance sheet optimisation and earnings support growth plans DECENT NPL COVERAGE RATIO DESPITE LOAN WRITE OFF CAPITAL RATIOS REMAIN SUPPORTIVE OF GROWTH |FBNHOLDINGS | FIRSTBANK (NIGERI
Slide 16: First-rate funding base - diversified and growing low-cost funding
GROUP STRATEGY 16 UPDATE First-rate funding base - a highly diversified and growing low-cost funding base, enabled by the strongest retail franchise in the industry. Leveraging this, FirstBank has prepaid $750 million Eurobonds in the last 12 months FUNDING BY TYPE (NBN) | FBNHOLDINGS DEPOSITS BY TY
Slide 17: Opex/CIR currently elevated due to tactical actions and strategic initiatives
GROUP STRATEGY 17 UPDATE Opex/CIR currently elevated due to some deliberate tactical actions and strategic initiatives. Expected to remain moderately elevated for the rest of the year, but with reducing impact into Q4 19 as associated revenue benefits gather momentum OPERATING EXPENSES (₦’BILLION) •
Slide 18: Risk Management
04 07 10 18 22 PERFORMANCE MACRO AND GROUP STRATEGY RISK HIGHLIGHTS REGULATORY UPDATE MANAGEMENT APPENDIX UPDATES
Slide 19: Sectoral breakdown of loans and advances to customers
RISK 19 MANAGEMENT Sectoral breakdown of loans and advances to customers H1 19 FIRSTBANK (NIGERIA) GROSS LOANS BY SECTOR H1 19 FBNQUEST MERCHANT BANK GROSS LOANS BY SECTOR Manufacturing 14.4% [14.1%] Agriculture 19.8% [21.3%] 0.8% 4.1% Construction 6.3% [5.5%] • Oil and gas upstream now <20%; 2.1% M
Slide 20: Structured credit risk management further improves credit quality
RISK 20 MANAGEMENT Structured credit risk management further improves credit quality LOANS AND ADVANCES BY CURRENCY |FIRSTBANK (NIGERIA) LOANS AND ADVANCES BY TYPE |FIRSTBANK (NIGERIA) 2.9% 3.9% 4.6% 4.2% 6.1% N1,785 N1,832 N1,729 N1,804 N1,595 54.0% 53.1% 53.4% 53.3% 53.7% 43.9% 41.8% 42.7% 42.1% 4
Slide 21: Significant improvement in asset quality towards FY 2019 NPL ratio objective
RISK 21 MANAGEMENT Significant improvement in asset quality towards FY 2019 NPL ratio objective NPL RATIOS | FBNHOLDINGS COST OF RISK RATIO | FBNHOLDINGS H1 19 NPL EXPOSURE BY SECTOR | FIRSTBANK (NIGERIA) Manufacturing 11.1% [6.1%] 82.3% 82.3% 4.7% 78.5% 78.3% 4.5% General Commerce 18.9% [9.4%] 15.3
Slide 22: Appendix
04 07 10 18 22 PERFORMANCE MACRO AND GROUP STRATEGY RISK HIGHLIGHTS REGULATORY UPDATE MANAGEMENT APPENDIX UPDATES
Slide 23: Optimising the balance sheet for revenue and operational efficiency
FINANCIAL 23 REVIEW Optimising the balance sheet for revenue and operational efficiency 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) Credit Losses 293
Slide 24: Transactional income momentum remains strong
Transactional income momentum remains strong. Sources remain diversified as well. In H1 19, continued surge in revenue from digital channels fully compensated for the plunge in FX income GROSS EARNINGS BREAKDOWN (Nbn)1 NET INTEREST MARGIN DRIVERS NON-INTEREST INCOME (NII) BREAKDOWN (Nbn) N293 N442 N
Slide 25: Commercial Banking Group
BUSINESS GROUP 25 PERFORMANCE COMMERCIAL BANKING GROUP Substantially delivered a complex balance sheet restructuring program. Successfully optimised capital without shareholder dilutive impacts. Made bold investments in differentiated capabilities for the future, with positive results. Ready for the
Slide 26: Merchant Banking and Asset Management Group
BUSINESS GROUP 26 PERFORMANCE MERCHANT BANKING AND ASSET MANAGEMENT GROUP Optimising a diversified business model KEY FINANCIAL HIGHLIGHTS KEY PERFORMANCE RATIO Income statement Return on Average Equity [%] Cost to Income [%] Non-Performing Loan1 [%] Nmn H1 19 H1 18 y-o-y % Gross earnings 16,947 18,
Slide 27: Insurance Group
BUSINESS GROUP 27 PERFORMANCE INSURANCE GROUP Growing market penetration rate with diversified revenue base and annuity drive KEY FINANCIAL HIGHLIGHTS KEY PERFORMANCE RATIO Income statement Return on Average Equity [%] Combined Ratio1 [%] Claims Ratio2 [%] • Return on Average Nmn Gross premium writt
Slide 28: Global Footprint
28 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 29: Definitions
29 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 30: 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