FBN Holding Plc (FBHN) is on dangerous grounds as Non Performing Loans (NPLs) spiked in the half year 2015 period.

The high level of NPLs will continue to exert strong pressure on FBHN balance sheet, with possible effect on credit extension or loans to customers.

Nairametrics had reported earlier that the largest lender by assets in Africa’s largest economy may have loan growth stunted as headwinds heighten.

This was confirmed in the most recent quarter as loans and advances fell 4.3 percent year to date to N2.1 trillion.

FBN Holdings NPL rose to the highest in 2 years as it hit 4.10 percent in the half year of 2015, the most recent figure.

This compares with 3 percent in the H1 2014 period.

ICT, Oil and gas sectors lead bad loan surge

The bank attributed the spiraling ratio of NPLs to information and communication, the oil and gas and personal & professional sectors.

Consequently, provision made on impaired assets increased by 239.90 percent to N22.58 billion in half year 2015, from N6.66 billion in 2014.

Simply put, the lender’s continuous provisions for bad loans are swelling thus hurting and slowing profit.

Of the N87.4 billion bad loans or NPL exposure, information and telecommunication had the highest exposure rate with 29.70 percent, followed by oil and gas downstream, 12.3 percent, manufacturing 11.50 percent, personnel and professional 10.80 percent, general 10.60 percent and oil and gas services 10.50 percent.

Despite the harsh operating environment with its inherent regulatory headwinds such as the harmonization of the cash reserve ratio and the devaluation of the currency, we in Nairametrics believe FBHN has significant room to improve efficiency.

Recently, some banks have published lists of delinquent debtors including FBHN

We believe these banks are chasing after dead assets as most of the debtors or companies affected are moribund.

One such company is STARCOMMS PLC a telecommunications giant that got wound up five years ago.

STARCOMMs owes FBHN as much as N5.49 billion.

“Though management was vague and largely attributed the markedly higher cost of risk (CoR) guidance to its raising of collective impairments on the oil and gas upstream book, we think it is proactively raising collective impairments on its exposure to Atlantic Energy ($400mn) and other potentially troublesome assets in the O&G book. We assume it gets classified as an NPL, which raises our FY15 NPL ratio to 7% from 4% previously vs. management’s 5% guidance,” said analysts at Renaissance Capital, an investment firm in a recent report on FBHN.

Source: Company Presentation

http://nairametrics.com/winter-is-coming-first-banks-rising-loan-losses-is-about-to-spell-doom-for-its-balance-sheet/ lalasticlala, davide470

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Hmmm my country

ok---are these details meant to give the shareholders -a head - into what FY2015 balance sheet would be like. I mean soft-landing for current directors and management team

PR guys sef...poor management is poor management. Lets call a spade a spade.

I said it,... If an independent country that had it's own currency keeps presenting her budgets with U. S Dollars Instead of Nigerian Naira

until de touch ma money..!!!

i wnt say anything...

Nairametric is fast becoming the defacto authority when it comes financial reporting in the nigerian internet space

everything is government related, salaries not paid for months, how will workers service loans, local contractors being owed trillions by govt, how will they meet their loan obligations, banks continue to slam charges and penalties on someone who already cant pay regular amount, smh for capitalism.

Let the music begins , we buy more.

I am more of volume and dividend hunter. Over the years Elephant always get better.

Onpe.
While serious SMEs are being neglected to chase after useless money bag corrupt politicians.

Gosh. Where will my savings be safe

Hmm

lol

make e no just affect my #2000 bank balance...


Na dere you go know say something dey.

sellydion:
Let the music begins , we buy more.

I am more of volume and dividend hunter. Over the years Elephant always get better.

FBN under the management of Onasanya and his cohorts is nothing to write home about, how can they give a loan of $400 million to an organisation and the loan is not performing, whereas average customers who need loans of N5 million and below are unable to get their loans approved.

I learnt FBN exposure to the Oil and Gas sector runs into Trillions of Naira. The management and board of the company needs to be investigated by EFCC.

hmmm...

NA WA THEY NEED TO BORROW THE POOR WHEN THE RICH CANNOT PERFORM. YEYE BANKS THAT CANNOT ORIENTATE POOR PEOPLE TO COME AND BORROW. NA SO SO BIG AMOUNT THEY EXPECTING.

Their Risk apetite is so high that it negates their reason. Customers be coming to my small bank saying why dont u relax your processes n requirements like first bank n diamond bank.

Well, we said we cant and they left. Now the customers are coming back because those big banks are now asking for bigger security with stiffer procedures.

But why is the cause of exposing many frivolous actions under this administration, whereas this might not be so if GEJ is still in power? I have never imagined our banks being in this mess before, honezly.

To the bankers, please be on the lookout. No job is secured in Nigeria nowadays.

aameyah:
Gosh. Where will my savings be safe

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UBA...

Poor first bank

yes its a loss but it wont affect first bank.You clearly dont know just how bastardly rich this Bank is.They are the Goldman Sachs of west Africa and if care is not taken,Africa.
First bank is a Major investor in oil and gas, telecommunications etc both here and overseas.Their account will swallow this loss.For goodness sake this bank lends money to other banks.

arabianights:
yes its a loss but it wont affect first bank.You clearly dont know just how bastardly rich this Bank is.They are the Goldman Sachs of west Africa and if care is not taken,Africa.
First bank is a Major investor in oil and gas, telecommunications etc both here and overseas.Their account will swallow this loss.For goodness sake this bank lends money to other banks.

Bros, you don't know jack about what you are saying.

arabianights:
yes its a loss but it wont affect first bank.You clearly dont know just how bastardly rich this Bank is.They are the Goldman Sachs of west Africa and if care is not taken,Africa.
First bank is a Major investor in oil and gas, telecommunications etc both here and overseas.Their account will swallow this loss.For goodness sake this bank lends money to other banks.

They are the major financier in the Oil and Gas sector, their loan exposure to that sector is over N1 Trillion, how can a proactive management be concentrated to a sector.

They will not finance manufacturing, agriculture, infrastructure, affordable real estate, small businesses etc. Instead of giving a loan of $400million to a company, it makes sense and it is a good risk management policy to give such a huge to loan to 10,000 promising small businesses at an average of N8million loan per business

arabianights:
yes its a loss but it wont affect first bank.You clearly dont know just how bastardly rich this Bank is.They are the Goldman Sachs of west Africa and if care is not taken,Africa.
First bank is a Major investor in oil and gas, telecommunications etc both here and overseas.Their account will swallow this loss.For goodness sake this bank lends money to other banks.

FBN will definitely get out of this, but the top management and directors of the company needs to be shown the way out of the company. We the shareholders cannot allow insiders to ruin our investment in this great company.

[quote author=manie post=36640584]


FBN will definitely get out of this, but the top management and directors of the company needs to be shown the way out of the company. We the shareholders cannot allow insiders to ruin our investment in this great company.
[/quote


ok oooooo...................Heads will roll but i doubt if top management will be affected.

manie:


They are the major financier in the Oil and Gas sector, their loan exposure to that sector is over N1 Trillion, how can a proactive management be concentrated to a sector.

They will not finance manufacturing, agriculture, infrastructure, affordable real estate, small businesses etc. Instead of giving a loan of $400million to a company, it makes sense and it is a good risk management policy to give such a huge to loan to 10,000 promising small businesses at an average of N8million loan per business

Hmmm..........Boss,get your facts right.Fbn invests in all the sectors that you claimed they avoid.

[quote author=arabianights post=36640644][/quote]


It will affect top management, it is the board that can approve a loan of $10 million and above. The directors have somethings to say about the non performing loan, they did not due their their due diligence before the loans were approved or they are the beneficiaries of the bad and unsecured loans.

Thavybe:
Bros, you don't know jack about what you are saying.

Really? i dont know jack about fbn or its wealth ?ok.

you must not comment on what you have no idea on.Its not by force to sound intelligent.Look at,as big as you are,you dont know how to research and learn.

I believe i have dignified your presence enough.Wont respond to you after this as you clearly are not intelligent or making attempts to develop your self

manie:



It will affect top management, it is the board that can approve a loan of $10 million and above. The directors have somethings to say about the non performing loan, they did not due their their due diligence before the loans were approved or they are the beneficiaries of the bad and unsecured loans.

Lets wait and see. Is this the first time such is happening? can you remember longe's issue?They must have learnt from that mistake.
Mind you the many of the loans were set up before the loan limit was set