FBN Holdings Plc. experienced a sharp 5.5% decline in market value on Tuesday, as investor sentiment waned ahead of the company’s earnings release. The bank’s stock price fell from ₦30.95 to ₦29.25 on the Nigerian Exchange (NGX), with 13 million shares traded. This decline contrasts with the broader market trend, where most tier-1 banks have seen strong re-ratings ahead of their earnings reports.
While expectations remain mixed regarding the impact of ongoing debt recovery efforts and alleged insider dealings, the bank’s management has come under scrutiny. Until proven otherwise, these issues continue to cast doubts over its governance and overall stability.
FBN Holdings, Nigeria’s oldest publicly traded banking group, has faced reputational challenges, particularly under the leadership of Femi Otedola, the group’s chairman. Otedola has reopened past financial disputes, targeting previous executives and creditors. Notably, he has taken legal action against media mogul Nduka Obaigbena, securing a Federal High Court order in Ikoyi, Lagos, to freeze $225.8 million linked to Obaigbena’s accounts across Nigerian banks.
Several former executives, including Bisi Onasanya, Oba Otudeko, and immediate past CEO Adesola Adeduntan, have been implicated in financial irregularities. Adeduntan, whose tenure was set to expire in December 2024, resigned abruptly in 2024 under controversial circumstances. Reports suggest he was pressured to step down by Otedola over an alleged ₦60 billion electronic fraud.
The conflict deepened when Otedola requested the resignation of Folake Ani-Mumuney, First Bank’s global head of marketing, after she hosted an extravagant party for Adeduntan. Additionally, FBNH has filed a lawsuit against Otudeko and Onasanya, accusing them of fraud amounting to ₦12.3 billion.
Despite these controversies, FBN Holdings has reported strong financial growth. In Q3 2024, the bank’s earnings per share surged by 125.1% year-on-year, driven by higher core and non-core income streams. Operating income doubled to ₦1.5 trillion, fueled by improved net interest margins and fair value gains on financial instruments.
Analysts at CardinalStone Limited revised their projections for the bank’s full-year performance, estimating:
– Gross earnings: ₦3.1 trillion
– Profit after tax: ₦734 billion
– Return on assets: 3.1% (up from 2.3%)
– Return on equity: 31.6% (up from 22.6% in 2023)
Additionally, FBNH’s loan exposure to the oil and gas sector, which accounted for 49% of its loan portfolio, saw a significant decline in non-performing loans (NPLs) from 27.3% in 2023 to 14.6% in Q3 2024. Analysts see this as an encouraging sign, particularly given the impact of currency devaluation on foreign-denominated loans.
While Otedola’s leadership has led to aggressive reforms, it has also sparked discontent among shareholders. His involvement in an unauthorised private placement has led to growing calls for his resignation. Investors remain wary of the ongoing legal battles and internal power struggles, which could further affect FBN Holdings’ stability.
As the bank prepares to release its full-year financials, the coming months will be critical in determining whether its strong earnings growth can offset investor concerns over governance and corporate leadership.
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