Explainer: FBN Holdings Achieves Record-Breaking N734 Billion Profit, 139% Growth

FBN Holdings

FBN Holdings Plc, one of Nigeria’s leading financial services groups, delivered an outstanding financial performance in 2024, significantly boosting its profitability. The company’s net income skyrocketed by an impressive 138.86% year-on-year, reaching N736.73 billion at the end of 2024. This is a substantial leap from the N308.43 billion recorded just a year prior in 2023.

What Drove This Massive Growth?

The remarkable increase in profitability was primarily fueled by a significant surge in revenue, driven by strong performance in both core and non-core banking operations. The company experienced an exceptional rise in net interest income, which soared by 155% to N1.391 trillion in 2024, compared to N546.29 billion recorded in 2023.

Net interest income is the difference between the interest banks earn from loans and other interest-generating assets and the interest they pay on deposits and borrowings. The substantial increase indicates that FBN Holdings made significantly more money from its lending activities in 2024.

Boost in Fee and Commission Income

In addition to net interest income, the company also saw growth in its fee and commission income. This revenue stream, which includes charges from account maintenance, card transactions, and other banking services, climbed by about 28% year-on-year. It reached N239.18 billion in 2024, compared to N187.07 billion the previous year.

Stronger Operating Profit Amidst FX Loss Reduction

FBN Holdings’ overall operating profit surged by 142.59%, reaching N861.97 billion in 2024, compared to N355.32 billion in 2023. This growth was supported by a sharp reduction in foreign exchange (FX) losses.

In 2023, the bank suffered massive FX losses amounting to N334.23 billion due to Nigeria’s currency fluctuations and devaluation. However, in 2024, the losses significantly dropped to N62.60 billion. This reduction played a vital role in the group’s overall financial success.

Challenges in Investment Portfolio

Despite its impressive earnings, FBN Holdings faced some setbacks in its investment portfolio. The company reported losses exceeding N40 billion due to a decline in the fair value of its investment securities.

Furthermore, its net gain from financial instruments carried at fair value through profit or loss dipped by 5.4%, decreasing from N678.43 billion in 2023 to N641.87 billion in 2024. This suggests that some of its investments did not perform as well as expected in the financial markets.

Rising Operating Costs and Personnel Expenses

While the bank’s revenue and profit surged, operating expenses also increased, reflecting Nigeria’s challenging economic environment. The financial report revealed that personnel expenses rose by 82%, jumping from N175.90 billion in 2023 to N320.23 billion in 2024. This significant increase in staff-related costs suggests that the company may have expanded its workforce, raised salaries, or faced inflation-driven expenses.

Pre-Tax Profit Hits a New High

At the end of 2024, FBN Holdings’ pre-tax profit stood at a record N862.39 billion, marking a staggering 142% increase from N356.15 billion in 2023. This growth highlights the company’s ability to navigate Nigeria’s economic challenges while maintaining strong financial health.

Conclusion

FBN Holdings Plc has demonstrated resilience and strategic financial management, achieving remarkable growth in 2024 despite economic uncertainties. The significant increase in net interest income, reduction in FX losses, and overall boost in profitability showcase the strength of its business model. However, rising operating expenses and investment losses are areas to watch in the coming years.

Looking ahead, maintaining this level of performance will require continued efficiency, innovation, and adaptability in an ever-evolving financial landscape.