First Bank of Nigeria Limited is optimistic about raising its profitability and giving shareholders bounteous returns in this financial year. Its performance, which gradually picked up in the first quarter, is an indication that it is putting its past performance behind it. It has ruled out job cut, insisted that its new growth plan would be driven by efficiency, productive workforce and high-end technology, writes COLLINS NWEZE.
First Bank of Nigeria Limited, a subsidiary of FBN Holdings Plc, is confident about its future. The tier-one lender said the next phase of its growth plan would be driven by efficiency, right technology and productive workforce.
The lender, which is among the Systematically Important Banks (SIBs), had last year, pruned down its workforce from 8,000 to 7,000 and disclosed that there is no need for further downsizing. It insisted that its current staff strength is right for the level of growth and profitability it is pursuing in the current financial year.
The lender’s investment in technology and human capital will continue to shape its long-term fundamentals and deliver a positive return on investment.
To ensure it achieves optimum growth and profitability within the financial year, the lender will be cutting the proportion of its lending to the oil and gas sector, currently at about 39 per cent of total loans, and focusing more on blue-chip companies in other industries.
Its Managing Director/CEO, Adesola Adeduntan said the lender expects to boost its return on equity, a key measure of profitability, to between 11 per cent and 14 per cent in 2016 from last year’s figure of three per cent. It is also targeting a cost-to-income ratio of 55 per cent in two years’ time from 59 per cent while Return on Equity (ROE) would be much better than last year.
FirstBank’s non-performing loans ratio stood at 22 per cent at the end of March, compared with 3.8 per cent a year earlier. Reducing that figure is the “number one priority,” Adeduntan told Bloomberg.
The bank chief ruled out equity raising this year, saying that \the lender’s Capital Adequacy Ratio (CAR) of 17.2 per cent was enough of a buffer and above the Central Bank of Nigeria (CBN’s) minimum requirement of 15 per cent. It would still be adequate if the floor is raised to 16 per cent in July for SIBs. “We continuously evaluate it and the position now is that there’s no need for external capital,” he said.
FBN Holdings Plc had announced its audited results for the full year ended 31 December 2015, which showed gross earnings of N505.2 billion. The figure represents 4.9 per cent year-on-year rise from N481.8 billion recorded during same period of 2014.
The income statement showed that net interest income also rose by 8.7 per cent to N265 billion from the N243.9 billion recorded in the previous year. The group result also showed that non-interest income dropped by 12 per cent to N99.4 billion, against N112.99 billion for the previous year even as operating income rose by 2.3 per cent to N364.4 billion, compared with N356.2 billion in the previous year.
However, the group’s profit before tax dropped by 77.1 per cent N21.5 billion, from N94.1 billion in 2014 while profit after tax equally dropped by 82 per cent to N15.1 billion from N84 billion during same periods.
FBN Holdings Group Managing Director, U.K Eke said: “This has been a very difficult time in the history of our institution. Despite the tough macroeconomic and regulatory backdrop during the year, our underlying business remains strong as reflected in the gross earnings growth of 4.9 per cent to N505.2 billion – clearly a leading position in the industry. Furthermore, the Holding company platform has provided support in mitigating the impact of credit losses and the vulnerabilities experienced by our commercial banking business”.
FBN Holdings equally announced its unaudited results for the three months ended March 31, 2016. The Group’s PBT stood at N22.1 billion, down 18.2 per cent year-on-year from N26.9 billion in March 2015 while the PAT stood at N20.7 billion, down 8.3 per cent year-on-year from N22.6 billion within the same periods.
The gross earnings of N107.5 billion was recorded, down 15.2 per cent year-on-year from N126.8 billion while net-interest income was at N63.9 billion, up 7.2 per cent year-on-year from N59.6 billion within the same period.
“The operating environment remains challenging, as shown by the 15.2 per cent decrease in gross earnings to N107.5 billion in the first quarter of this year. However, we are confident that the changes that we have implemented, along with those we plan to implement, will strengthen our business model, and ultimately enable us restore value to our shareholders whilst building long-term sustainability into our businesses,” Ekeh said.
Adeduntan, said: “First quarter revenue performance demonstrates that the underlying business fundamentals remain strong despite a challenging macroeconomic and business environment, coupled with credit quality concerns.”
E-payment milestones
FirstBank processed 275,000 bill payments through its Automated Teller Machines (ATMs) and processed airtime purchase worth N3 billion.
The figures, which were as at December last year, validates its leadership position yet again as it presently accounts for 45 per cent of bills payment services on ATM in the nation’s banking industry.
It explained that the bills payment option is one of the features of its ATMs, which also have other unique functional features which include cash transfer, air-time top-up, cash deposit among others.
“The bills payment option is the non-cash transaction feature on the ATM that makes it easier for customers to pay for bills such as Cable TV subscription, post-paid phone bills, and pre- booked airline tickets. These transactions can be executed through the Quickteller option on any of the bank’s ATMs,” it said.
It explained that the transfer feature enables customers to transfer money from their accounts to both intra and interbank (other banks) accounts, thereby reducing the queues in the banking hall, save time as well as provide a more convenient option for customers’ money transfer needs.
The bank’s spokesperson, Folake Ani-Mumuney, said this distinct development was achieved as a result of the bank’s desire to reach out to more people in the country and as part of living true to putting customers at the heart of our business. “FirstBank is positioned to meet the needs of its customers and reach out to the under banked and unbanked. Our mission is to make banking as convenient for our customers as is obtainable globally”, she said.
She said that to aid the use of its ATMs nationwide and for enhanced protection of customers’ funds, the Bank has, in particular, designed innovative and tailored-made financial services products to ease banking transactions. A major product is the FirstBank Verve debit card, a Naira denominated domestic payment card accepted for payment throughout Nigeria on all electronic channels, including the ATMs.
African expansion
FirstBank is one of the lenders deepening its African footprints and has completed integration of new subsidiaries in six African nations. Leveraging experience spanning over a century of dependable services, the lender has continued to build relationships and alliances with key sectors of the economy.
As the global operating environment evolves, it has kept pace, responding to the dynamic needs of its customers, investors, regulators, host communities, employees and other stakeholders.
Through a balanced approach to plan execution, it has consolidated its industry leadership by maintaining trans-generational appeal. Thus, the bank has continuously boosted its customer-base, which cuts across all segments in terms of size, structure and sectors through expansion to six Africa countries.
FirstBank has its footprints in the United Kingdom and France through its subsidiary, FBN Bank (UK) Limited with branches in London and Paris; and in Johannesburg, Beijing and Abu Dhabi with its Representative Offices there. In October 2011, the bank acquired a new subsidiary, Banque International de Credit (BIC), one of the leading banks in the Democratic Republic of Congo.
In November 2013, FirstBank acquired ICB in The Gambia, Sierra-Leone, Ghana and Guinea, and in 2014, the Bank acquired ICB in Senegal. The unveiling of the FBNBank Senegal refreshed brand identity in January this year is a major landmark in its plan for growing its sub-Saharan African footprints and the banks have all transited into FBNBank in their respective locations.
