First Holdco Plc · NSENG:FIRSTHOLDCO
First Holdco — FBN Holdings — 9M 2019 Earnings Presentation
32 slides from First Holdco's earnings presentation, Sep 30, 2019
Slide 1: Investor & Analyst Presentation
Investor & Analyst Presentation For the nine months ended 30 September 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 nine months ended 30 September, 2019. The Group’s Financial statements and the information provided in this presentation, represent FBNHoldings Plc and its subs
Slide 3: Presentation Outline
PRESENTATION OUTLINE 04 Performance Highlights 07 Macro and Regulatory Updates 10 Group Strategy Update 18 Risk Management 22 Outlook & Guidance 24 Appendix
Slide 4: Performance Highlights
04 07 10 18 22 24 PERFORMANCE MACRO AND GROUP STRATEGY RISK OUTLOOK & HIGHLIGHTS REGULATORY UPDATE MANAGEMENT GUIDANCE APPENDIX UPDATES
Slide 5: On course to delivering sustainable long-term performance with progressive improvements
PERFORMANCE 5 HIGHLIGHTS On course to delivering sustainable long-term performance with progressive improvements in asset quality, profitability and diversified revenue Key highlights Continuous improvement in asset quality in line with our commitment of achieving a single digit NPL ratio Non-pe
Slide 6: Profitability gains momentum as we focus on enhancing revenue generating capacity
PERFORMANCE 6 HIGHLIGHTS Profitability gains momentum as we focus on enhancing revenue generating capacity and improving operational efficiency Key Income Statement Ratios (%) Key Balance Sheet Ratios (%) Earnings Yield Net Interest Margin Post Tax ROaE Post Tax ROaA Non-Performing Loans NPL Coverag
Slide 7: Macro and Regulatory Updates
04 07 10 18 22 24 PERFORMANCE MACRO AND GROUP STRATEGY RISK OUTLOOK & HIGHLIGHTS REGULATORY UPDATE MANAGEMENT GUIDANCE APPENDIX UPDATES
Slide 8: Operating environment remains challenging with macro factors influencing sentiment
MACRO AND 8 REGULATORY UPDATES Operating environment remains challenging with macro factors influencing sentiment HEADLINE INFLATION REMAINS STABLE WITH DECLINING GDP DECREASE IN FOREIGN RESERVES AS CRUDE OIL PRICES SLOWS DOWN 1.7 1.7 1.8 15.9 1.8 1.9 1.9 15.4 1.8 1.8 1.7 13.3 46.21 47.79 44.31 44.4
Slide 9: Key regulatory developments in the quarter
MACRO AND 9 REGULATORY UPDATES Key regulatory developments in the quarter CBN Issued revised regulations on Electronic Payments and Collections Central Bank of Nigeria for public and private (CBN) advises minimum sectors to guide the end- loan to deposit ratio CBN further reviews the to-end electron
Slide 10: Group Strategy Update
04 07 10 18 22 24 PERFORMANCE MACRO AND GROUP STRATEGY RISK OUTLOOK & HIGHLIGHTS REGULATORY UPDATE MANAGEMENT GUIDANCE APPENDIX UPDATES
Slide 11: Delivering on our Commitments
GROUP STRATEGY 11 UPDATE Delivering on our Commitments Progressive improvement in asset quality Sustained growth in transaction-led income Ramped up revenue from digital channels On track to delivering a single digit NPL ratio o Electronic banking now represents 34.8% of non- o NPL ratio down to
Slide 12: Single digit NPL in sight whilst cost of risk continues to decline
GROUP STRATEGY 12 UPDATE Single digit NPL in sight whilst cost of risk continues to decline SINGLE DIGIT NPL RATIO (%) IN SIGHT | FBNHOLDINGS COST OF RISK (%) | FBNHOLDINGS 25.9 25.3 4.5 3.5 14.5 2.7 12.6 2.2 <10.0 1.9 FY 18 Q1 19 H1 19 9M 19 FY 19e 9M 18 FY 18 Q1 19 H1 19 9M 19 • Delivering a singl
Slide 13: Maintained industry leadership in agency and digital banking
GROUP STRATEGY 13 UPDATE Maintained industry leadership in agency and digital banking with increasing customer adoption Firstmonie Agent Banking Scheme • Enhanced digital capacity with the implementation of a robust IT infrastructure – positioning the group for accelerated business growth • Digital
Slide 14: Steady growth in revenue from alternative channels
GROUP STRATEGY 14 UPDATE Steady growth in revenue from alternative channels GROWING REVENUE FROM DIGITAL BANKING CHANNELS | (E- BUSINESS CONTRIBUTION TO NON INTEREST REVENUE) 9M 19 34.8% FY 18 25.8% 9M 18 25.3% FY 17 22.0% USSD BANKING SCHEME | TRANSACTION VALUE (₦’ BILLION) MOBILE BANKING SCHEME |
Slide 15: Improving NPL ratio as balance sheet optimisation and enhanced earnings provide support
GROUP STRATEGY 15 UPDATE Improving NPL ratio as balance sheet optimisation and enhanced earnings provide support for growth STEADY IMPROVEMENT IN ASSET QUALITY|FBNHOLDINGS CAPITAL RATIOS SUPPORTS FUTURE GROWTH | FIRSTBANK (NIGERIA) + 9M 2019 78.5% 78.3% 82.3% Profit 64.5% 61.7% 16.4% 17.4% 17.3% 16.
Slide 16: Strong liquidity, highly diversified and sustained growth in quality low cost funding
GROUP STRATEGY 16 UPDATE Strong liquidity, highly diversified and sustained growth in quality low cost funding, supported by the strength of the retail franchise FUNDING BY TYPE (NBN) | FBNHOLDINGS DEPOSITS BY TYPE (NBN) | FBNHOLDINGS N5,622 • Deposits from customers grew by 5.3% N3,384 N3,487 N3,51
Slide 17: Operating expenses moderated during the quarter
GROUP STRATEGY 17 UPDATE Operating expenses moderated during the quarter. Elevated CIR represents impact of one-off expenses and projects that will deliver operational efficiencies and enhance revenue accretion over the longer term OPERATING EXPENSES (₦’BILLION) • Focus remains on operational effici
Slide 18: Risk Management
04 07 10 18 22 24 PERFORMANCE MACRO AND GROUP STRATEGY RISK OUTLOOK & HIGHLIGHTS REGULATORY UPDATE MANAGEMENT GUIDANCE APPENDIX UPDATES
Slide 19: Diversified portfolio across lending businesses
RISK 19 MANAGEMENT Diversified portfolio across lending businesses 9M 19 FBNQUEST MERCHANT BANK GROSS LOANS BY 9M 19 FIRSTBANK (NIGERIA) GROSS LOANS BY SECTOR SECTOR • Net loans to customer grew by 8.1% y-t-d Manufacturing [14.1%] Agriculture [21.3%] 1.4% 4.3% Construction [5.5%] • Well diversified
Slide 20: Rebalanced portfolio minimising vulnerability
RISK 20 MANAGEMENT Rebalanced portfolio minimising vulnerability LOANS AND ADVANCES BY CURRENCY |FIRSTBANK (NIGERIA) LOANS AND ADVANCES BY TYPE |FIRSTBANK (NIGERIA) N1,832 N1,729 N1,804 N1,595 N1,656 3.9% 4.6% 4.2% 6.1% 5.7% 53.7% 53.4% 53.3% 54.0% 56.6% 42.7% 42.1% 41.9% 41.8% 45% 45% 37.7% 51% 53%
Slide 21: Balance sheet repositioned for enhanced earnings
RISK 21 MANAGEMENT Balance sheet repositioned for enhanced earnings NPL RATIOS | FBNHOLDINGS COST OF RISK RATIO | FBNHOLDINGS 9M 19 NPL EXPOSURE BY SECTOR | FIRSTBANK (NIGERIA) 82.3% 78.5% 78.3% Manufacturing 4.5% General Commerce 64.5% 18.3% 61.7% 11.6% Oil & Gas Upstream 3.5% Oil & Gas Services 25
Slide 22: Outlook & Guidance
04 07 10 18 22 24 PERFORMANCE MACRO AND GROUP STRATEGY RISK OUTLOOK & HIGHLIGHTS REGULATORY UPDATE MANAGEMENT GUIDANCE APPENDIX UPDATES
Slide 23: 2019 Guidance: Profitability and efficiency metrics
OUTLOOK & 23 GUIDANCE 2019 Guidance FY 2019 9M 2019 FY 2018 (Guidance) (Actual) (Actual) ROaE 12 – 14% 12.2% 9.9% ROaA 1 – 1.5% 1.2% 1.1% Profitability and efficiency metrics Cost to Income ~71%* 71.5% 63.4% Cost of Risk 2 – 3%* 1.9% 3.5% Cost of Fund 3 – 4% 3.3% 3.4% NIM 7 - 8% 7.3% 7.5% Deposit gr
Slide 24: Appendix
04 07 10 18 22 24 PERFORMANCE MACRO AND GROUP STRATEGY RISK OUTLOOK & HIGHLIGHTS REGULATORY UPDATE MANAGEMENT GUIDANCE APPENDIX UPDATES
Slide 25: Steady optimisation of the balance sheet allows for future growth
25 APPENDIX Steady optimisation of the balance sheet allows for future growth Income Statement Snapshot (₦ billion) Statement of Financial Position (₦ billion) Total Assets Gross Earnings Net Interest Income Impairment Charge for Non-Interest Income Loans & Advances (net) Credit Losses 76.2 98.8 93.
Slide 26: Strong non-interest income supports revenue growth
26 APPENDIX Strong non-interest income supports revenue growth NET INTEREST MARGIN DRIVERS NON-INTEREST INCOME (NII) BREAKDOWN (Nbn) GROSS EARNINGS BREAKDOWN (Nbn)1 N93 N132 N30 N64 N99 N442 N584 N146 N294 N440 11.7% 11.4% 12.0% 11.7% 11.2% 6% 18% 18% 18% 18% 18% 7% 2% 12% 12% 3% 16% 24% 23% 25% 26%
Slide 27: Commercial Banking Group
27 APPENDIX COMMERCIAL BANKING GROUP Positioned for the next phase of business growth following substantial execution of the enterprise transformation program with a robust balance sheet and enhanced transactional capabilities KEY FINANCIAL HIGHLIGHTS KEY PERFORMANCE RATIO Income statement Return on
Slide 28: Merchant Banking and Asset Management Group
28 APPENDIX MERCHANT BANKING AND ASSET MANAGEMENT GROUP Well diversified business model with an increased focus on optimising opportunities across the entire value chain KEY FINANCIAL HIGHLIGHTS KEY PERFORMANCE RATIO Income statement Return on Average Equity [%] Cost to Income [%] Non-Performing Loa
Slide 29: Insurance Group
29 APPENDIX INSURANCE GROUP Deepening market coverage and penetration resulting in diversified revenue and enhanced profitability KEY FINANCIAL HIGHLIGHTS KEY PERFORMANCE RATIO Income statement Return on Average Equity [%] Combined Ratio1 [%] Claims Ratio2 [%] • Return on Average Nmn Gross premium w
Slide 30: Global Footprint
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 Bank
Slide 31: Definitions
APPENDIX Definitions ₋ Cost-to-income ratio computed as operating expenses divided by operating income ₋ Cost of risk computed as annualised credit impairment charges divided by the average opening and closing gross loans balances ₋ Net-interest margin computed as annualised net interest income divi
Slide 32: 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