First Bank to Sack 1,000 Workers
Category: Business News
FBN Holdings Plc, the parent company of
First Bank Nigeria Limited, is planning to cut about 1000 jobs and focus
less on providing loans to the oil industry in a bid to reverse the
2015 financial year’s 82 per cent slump in profit.
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 “really bad” figure of three per
cent, according to the Chief Executive Officer of First Bank of Nigeria
Limited, FBN’s main subsidiary, Mr. Adesola Adeduntan.
Also See: Ecobank Sacks 50 Management Staff
He said the company was also targeting a
cost-to-income ratio of 55 per cent in two years time from 59 per cent,
Bloomberg reported.
“ROE will be much better than last year,” Adeduntan said in a telephone interview from Lagos on Wednesday.
“At a minimum, we should triple it. We
do not shy away from taking difficult decisions. We used to have above
8,000 people. We’ll push it down, gradually to 7,000,” he added.
Its net profit fell to N15bn ($76m) from
N84bn in 2014, as impairments soared and the economy slowed amid a
crash in the price of crude, the biggest source of Federal Government
revenue and export earnings.
Growth decelerated to 2.8 per cent in
2015, the lowest level since 1999, and may worsen to 2.3 per cent this
year, according to the International Monetary Fund.
First Bank’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,” said
Adeduntan.
He said the bank would do that by
reducing 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.
Adeduntan ruled out any equity raising
this year, saying the bank’s capital adequacy ratio of 17.2 per cent was
enough of a buffer and above the Central Bank of Nigeria’s minimum
requirement of 15 per cent.
It would still be adequate if the floor
is raised to 16 per cent in July for Systemically Important
Institutions, including First Bank.
“We continuously evaluate it and the
position now is that there’s no need for external capital,” Adeduntan,
46, who became the CEO in January after joining First Bank as chief
financial officer in mid-2014, said.
“We generate enough internal capital,”
he said. FBN’s shares rose by 5.3 per cent to N3.57 on Wednesday. They
are, however, still down 30 per cent this year, more than the Nigerian
Stock Exchange All Share Index’s drop of 13 per cent.
The bank’s valuation lags that of its
main competitors such as Guaranty Trust Bank Plc and Zenith Bank Plc.
Its stock trades at 0.22 times book value, or the theoretical price that
shareholders will get if all assets are sold and liabilities paid off.
That compares with 1.18 times for GTBank and 0.62 for Zenith.
“The market has over-corrected,”
Adeduntan said, adding, “It’s priced in all the negative information.
For us, it can only go up.”
Source: Punch
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