In
First Bank of Nigeria Limited, virtually all the indices are looking bright.
From a stellar performance in its last year and first quarter of 2022
operations to the unleashing of its robust digital banking solutions in its
operations, analysts say its current management deserves accolades for
preparing the bank for the challenges and changing needs in the emerging
dispensation in the Nigerian banking industry.
As
competition mounts in the ever-changing Nigerian banking landscape, analysts
said the future of the industry will be determined by the speed and readiness
of the operators to navigate their institutions to meet the changing dynamics
in the taste and needs of consumers of banking products and services.
This
is because as the Nigerian economy undergoes different levels of transformation
and challenges evident in the shrinkage of the citizens’ purchasing power, and
the narrowing of their choices, bank customers, as well as investors in the
banking stocks, will naturally gravitate to any of the banks which has what it
takes to meet their needs.
In
the consideration of the above-painted scenario, analysts believe the cap fits
First Bank of Nigeria Limited, the banking arm of the FBNHoldings, perfectly.
In
the last few weeks, FirstBank has remained in the news as a result of its
impressive performance in its 2001 full-year operation, a feat which it
effortlessly repeated in the first-quarter results.
And
like an institution that is committed to staying put at the top of the ladder,
the bank is sticking to its commitment to be the darling of Nigerian bank
customers through its resolve to leverage its digital banking solutions by
moving from a dependence on branches for doing business to digital banking for
excellent performance.
The result of this bold move is the unprecedented surge in the number of customer accounts from 10 million to 36 million in a few years.
Shift to Digital Architecture:
FirstBank
had over the years taken advantage of its geographical footprints. A report by
the Lagos-based research firm, Financial Derivatives Company Limited, noted
that at one point in time, FirstBank had over 25% of total bank branches in
Nigeria. Leveraging on the economies of scale, today, First Bank has made a
mental shift from relying on its branches for doing business to a greater
emphasis on its digital architecture. In the digital space, First Bank is not
only a fierce competitor but a winning institution.
There
is no doubt that the Nigerian oldest bank is well-positioned to deepen its
penetration in the information technology space through its wide branch network
(deposit and loan portfolio of N6.13trillion and N4.03 trillion respectively).
With
its e-banking products and services, customers can pay bills, send/receive
money, monitor every transaction on their account, make cashless purchases
online or in person, and much more. All these can be done on an
internet-enabled mobile phone, PC, or tablet, from wherever you are in the
world.
The
FDC report explained that despite the intense competition faced by Nigerian
banks from fintech and telecommunication operators, First Bank of Nigeria
Limited remains competitive in the digital banking space with increased
customer acquisition from 10 million to 36 million in a few years. Also, the
group has a robust retail banking franchise; comprising over 3,000 configured
terminals and over 15,000 points of sale (POS) terminals, an agency banking
network, as well an internet and mobile banking platform.
Banking on Well-structured Management:
Analysts
are also of the opinion that the story about the impressive performance of
First Bank, especially in the recent time cannot be complete without a chapter
on the unique style of the current management which has been able to navigate
the bank towards the path of sustained profitability and acceptance by the
banking community.
For
instance, analysts from FDC maintained that “The era of an experienced and
well-structured management team signifies a continued restructuring of the
bank’s operations and the gigantic return to
profitability of a previously crippling giant.”
The
research firm noted that the bank’s international presence gives it an edge and
serves as a buffer against currency weakness, political challenges, and
macroeconomic vulnerabilities.
Today,
the reality is that the bank which was formerly plagued with bad credit
decisions, significant non-performing loans, and poor corporate governance
practices has taken drastic steps to tackle these worrisome issues and
re-establish itself as a formidable force in the Nigerian banking space.
This
new identity can be tied to a restructuring exercise that improved corporate
governance, asset quality, and shareholders’ value.
Season of Stellar Performance
Impressively,
the bank sustained this positive performance by recording a 32% increase in
gross earnings to N180bn in Q1’22 from N136.6bn in Q1’21. Profit after tax was
up 108% to N32.4billion (Q1’22) relative to N15.6 billion (Q1’21).
This
stellar performance is attributable to a robust loan portfolio, effective cost
structure, and increased digital services.
As
a result of First Bank’s restructuring exercise, the bank reported a huge sum
of N141 billion as loan recovery from previously written off Atlantic Energy
Ltd loan in 2021. This exercise bolstered a 100% bottom-line growth in the
period under review.
In
the period, FirstBank Limited recorded gross earnings of N170.4 billion, up by
33 per cent as against N128.1billion in the previous year. The bank’s net
interest income was put at N72.9 billion, a 42.1 per cent from N51.3 billion
generated in the same period of 2021, while non-interest income was N58.8
billion, up by 21.7 per cent from the 2021 figure.
To
show the bank was in a serious business of lending, its customers’ loans and
advances (net) totaled N2.999 trillion, up by 5.8 per cent, year-to-date as of
December 2021, which was put at N2.835 trillion, while customers’ deposits were
N5.9 trillion, as against N5.6 trillion in the first quarter of 2021, a 5.4 per
cent increase.
In
a ranking conducted by Nairametrics for instance, FirstBank ranked number one
among banks reviewed as far as cost to income ratio was concerned. The bank
recorded the highest decline in its cost-to-income ratio in Q1 2022, dropping
from 79.5% recorded in Q1 2021 to 67.03% in the review period.
The cost-to-income ratio is a key financial metric, which shows a company’s
costs as a proportion of its income. It helps to give investors a clear view of
how efficiently a bank is being run. Specifically, it shows how much input the
bank requires to generate N1 of output.
Notably,
the lower this ratio, the more profitable, productive, and competitive the bank
will be. Here are the banks with the lowest cost-to-income ratio.
Commitment to Greater Profitability:
The
Chief Executive Officer of the bank, Dr. Adesola Adeduntan, expressed the
resolve of the management of the bank to use the current good performance to
make its drive for profitability a permanent thing. He said, “At FirstBank, we
have historically been interwoven with the fabric of this nation with a
full-service commercial banking offering catering to every segment of the
economy. We believe we are now in a good position to translate this unique
revenue-generating potential into improved bottom-line performance.
“Our
first-quarter results demonstrate that we have commenced our journey of Quantum
Profitability Leap in earnest with profit before tax doubling to N34.1 billion
as the Bank begins to reap the dividends of the successful restructuring of its
balance sheet, revamped risk management, robust technology, and innovative
service offerings.”
Adeduntan
stressed the determination of the management of the bank to explore the
potential of FirstBank’s large network in consolidating the current impressive
runs.
“Looking ahead, we will continue to maximise all opportunities presented by our
large network, and support our customers with innovative value-adding solutions
through these uncertain times while investing in strengthening our digital
banking offerings to deliver a better customer experience.”
Recognised Brand.
Interestingly,
these huge investments in digital technology are not going unnoticed by the
industry’s observers. And in 2022 alone, FirstBank has won two awards: Best
Bank in Nigeria 2022 and Best Banking Digital Transformation Nigeria at the
International Investor Awards 2022, a print and online publication.
The
organiser explained that the bank was recognised with the Best Bank in Nigeria
2022 award for its leadership role in promoting financial inclusion in Nigeria
which has been integral to improving lives and stimulating businesses of
individuals across the country.
Also,
the Best Bank in Digital Transformation was awarded to FirstBank in recognition
of its continued efforts at reinventing its digital banking channels which have
been central to reinforcing the Bank’s leading role in promoting a cashless
society in the country whilst putting customers at an advantage in enjoying a
secured and seamless digital banking experiences. The Bank’s digital banking
channels include; its recently unveiled fully automated branch (FirstBank
Digital Experience Centre), *894# USSD banking, FirstMobile, First online, and
WhatsApp banking amongst others.
With
over 750 business locations and over 170,000 Banking Agents spread across 99%
of the 774 Local Government Areas in Nigeria, FirstBank provides a
comprehensive range of retail and corporate financial services to serve its over
30 million customers. The Bank has an international presence through its
subsidiaries, FBNBank (UK) Limited in London and Paris, FBNBank in the Republic of Congo, Ghana, The Gambia, Guinea, Sierra
Leone, and Senegal, as well as a Representative Office in Beijing.
Culled from Leadership
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