FBN Holdings Plc cut down its workforce from 8,179 at the end of 2021 to 7,972 at the end of 2022 and consequently slashed personnel expenses by N11.4 billion but that failed to defend the group’s profit for the year.
The bank ended the financial year with the Group’s after-tax profit going down by about 10 percent from N151 billion in 2021 to N136 billion.
Staff downsizing has been sustained for many years in the bank’s holding company, counting down from the peak figure of 10,464 at the end of 2014 to 7,972 in 2022 – the lowest personnel figure in more than a decade.
Except for a 4.7 percent growth in the workforce to 9,159 in 2018, the bank has cut staff numbers every year since 2015.
Personnel expenses dropped from roughly N129 billion in 2021 to a little over N117 billion in 2022, which provided one of the biggest cost-saving lines for the bank in the year.
While the cost-saving helped to slow down the profit drop, it could not counter the impact of a sharp slowdown in revenue growth in the year.
The bank’s audited financial report for the full year ended December 2022 shows that the financial institution lost revenue growth momentum that saw it through to a doubling of after-tax profit in the preceding financial year.
Gross earnings decelerated considerably from over 28 percent growth in 2021 to 6.3 percent to close at N805 billion in 2022. This was the major downside force for the bank in the year, as major costs grew well ahead of the gross income.
Revenue weakness in the year came entirely from the volatile behaviour of non-interest earnings – which reversed from a 95.4 percent upsurge in the preceding financial year to a drop of almost 44 percent to close at N204.6 billion in 2022.
The drop in non-interest income was led by a plunge in loan recoveries – which fell from N141 billion in 2021 to N13.7 billion in 2022. The rise and fall of loan recoveries explain the gain and loss of fortunes for the bank over the review period.
Apart from the disappointing loan recovery performance in the year, other non-interest income lines also went down during the year. Net gains on financial instruments fell from N53.7 billion to N38.6 billion over the period.
Net gains on the sale of investment securities dropped from N31.3 billion to N22.4 billion over the same period and dividend income also went down from N6.5 billion to a little over N3 billion.
Foreign exchange income is the only non-interest income line that grew – from N7 billion to over N22 billion while net fee and commission income closed flat at less than N118 billion.
A strong upside force for the bank in the year came from interest earnings that rose by one-half to roughly N552 billion – ending four years of declining interest income and attaining a new peak for the income line for the first time since 2017.
The upturn in interest income remedied the 44 percent fall in non-interest income and accounted for the 6.3 percent improvement in gross earnings for the year.
The bank’s management worked extensively on the side of costs to try to balance the revenue slowdown. Interest expenses moderated relative to interest earnings at an increase of 34 percent to N188.7 billion.
A drop of N23 billion or 25 percent in net credit loss expenses to N68.9 billion provided the biggest cost saving for the bank in the year. This reinforced the cost saving from interest expenses, leading to an outstanding growth of almost 116 percent in net interest earnings after the loan loss charges.
Despite the cut down in personnel expenses, the total operating cost of the bank still grew ahead of gross earnings at 9 percent to about N364 billion. The resulting increase in operating cost margin plus the loss of non-interest revenue undermined the bottom line in the year.
FBN Holdings ended the year’s operations with earnings per share of N3.74, down from N4.17 per share in the 2021 financial year. It has announced a cash dividend of 50 kobo per share to shareholders to be paid on 16th August 2023.
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