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FBN shares fall to 13-year low on earnings warning

By on February 26, 2016

Shares of FBN Holdings Plc fell to  its lowest level in almost 13 years on Wednesday after  Nigeria’s largest lender by assets warned that  earnings for the full year  ended December 31, 2015,  would  be lower than those of 2014. Shares fell 4.4 per cent to N3.47 per share, which is its lowest since August 2003.

In statement to the management of the Nigerian Stock Exchange (NSE) and market operators, signed by the Company Secretary,  Tijjani Borodo, FBN Holdings said following  the review of its management accounts for the 2015, it is expected that  earnings will be materially below that of the prior year.

“The reduction in earnings is as a result of the recognition of impairment charges on some specific accounts resulting from a reassessment of the loan portfolio within our commercial banking business. This reassessment was driven by the challenging macro environment coupled with fiscal and monetary headwinds, which have resulted in marked reduction in domestic output. This is a prudent measure being taken while the bank has commenced active remedial action on the specific impaired accounts,” the bank said.

However, FBN Holdings assured stakeholders that its merchant banking, asset management as well as insurance businesses remain strong and resilient.

“We reiterate our 2016 focus on restoring shareholder value by driving improvements in underlying asset quality, cost efficiency, enhancing revenue generation and extracting synergies across the Group, as well as growth through innovation,” FBN Holdings stated.

The shares of the company fell as the market reacted negatively to the earnings warning, which some market analysts said is a proactive measure.

A stockbroker said the current price of stock offers investors an unprecedented entry opportunity, saying “the market and companies will over the current economic headwinds. There is no better time to buy these stocks than now.”

Meanwhile, the stock market closed negatively  for the third day amid sell offs in banking and consumer goods bellwethers. The NSE All-Share Index (ASI) fell by 0.9 per cent to close at 23,883.34, while market capitalization shed N68.4 billion to close at N8.2 trillion.  A total of 23 stocks declined, while 13 appreciated. Investors traded 269.3 million shares worth N1.2 billion in 3,002 deals.