In line with industry trend, First Bank of Nigeria Holding Plc (FBNH)’s 2020FY financial performance was supported mainly by non-interest income. Higher transaction volumes from its enlarged agency and digital platforms, increased credit related fees, as well as elevated prices of investment securities, were instrumental in providing respite for gross earnings, which dipped marginally by 1.92% YoY to NGN578.95bn. We highlight the impressive growth (+45.87% YoY) of trading gains, credit related fees and E-banking fees, which now constitute c.75% of total non-interest income. On the other hand, reduced interest income (-10.91% YoY), on the back of low yield on investment securities, was the source of the drag in topline. Our outlook for interest income is positive, fueled by the upward repricing of yields on investment securities. We think that Management’s intention to replicate the agent banking strategy in other African subsidiaries would support transaction volumes and potentially sustain non-interest income growth. However, we do not expect much from trading gains in 2021FY, given that the factors which contributed to its strong performance in 2020FY are beginning to reverse.
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