First Bank of Nigeria’s Profit Little Changed as Costs Rise

FBN Holdings Plc (FBNH), owner of First Bank Nigeria, the West African nation’s third-largest lender by market value, said first-half profit was little changed as costs increased.

Net income in the six months through June rose to 46.1 billion naira ($284.9 million) from 45.3 billion naira a year earlier, the Lagos-based lender said in a statement on the website of the Nigerian Stock Exchange today. Gross earnings increased 8 percent to 194.9 billion naira. Interest expenses climbed 32 percent to 38 billion naira, while impairment charges for loan losses rose 9 percent to 10 billion naira.

Profit growth was slowed by a “significant rise in impairments that was up 371 percent quarter-on-quarter to 9.9 billion naira in first half versus 1.7 billion naira in first quarter and 8.2 billion naira in the three months to June,” Akinbamidele Akintola, a Lagos-based equity analyst with Renaissance Capital, said in e-mailed comments.

Lenders in Africa’s second-biggest economy are returning to profitability after Central Bank of Nigeria Governor Lamido Sanusi bailed out banks with 620 billion naira as loans to equity speculators and fuel importers in 2008 and 2009 pushed the industry near collapse. The government then created the Asset Management Corp. of Nigeria to buy lenders’ bad debts.

Amcon, which is partly funded by the nation’s banks, increased the assets lenders are required to set aside for failed loans to 0.5 percent this year from 0.3 percent. The central bank also directed lenders to lower fees and commissions starting April 1 to reduce conflict with clients.

First Bank’s shares declined 0.7 percent to 16.19 naira as of 1:58 p.m. in Lagos, the commercial capital. The stock has gained 3 percent this year, compared with the 17 percent rise of the Bloomberg NSE Banking Index, which tracks Nigeria’s 10 biggest banks.

To contact the reporter on this story: Emele Onu in Lagos at eonu1@bloomberg.net

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net

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