Aided by a stronger Net Interest Margin (NIM) (+1.0ppt YoY) and higher fair value gains on financial instruments, FBNH reported a 2.1x surge in operating income to N1.5 trillion in 9M'24.
This impressive operating income print highlights the impact of a 76.3% YoY expansion in interest-earning assets (IEA) to N19.3 trillion and a 3.2ppts increase in asset yields that aligns with the elevated interest rate environment.
Hence, accounting for these improved gains as well as broadly stable core drivers, we revise our gross earnings and PAT projections to N3.1 trillion and N734.0 billion, respectively. For profitability metrics, we see scope for higher ROA of 3.1% (FY'23: 2.3%) and ROE of 31.6% (FY'23: 22.6%).
In FY'25, we expect PAT to improve by a milder c.17.1% YoY due to the high base created by FY'24. This expectation is hinged on tamer Net Interest Income (NII) growth (+33.3% YoY compared to 139.3% in FY'24) and moderation in FX-related income as currency pressure eases. For NII, we remain optimistic about the bank's ability to accrue benefits from the high-interest rate environment. Nevertheless, the potential rate cuts in H2'25 may place a cap on NII growth.
