FBN Holdings Plc, the parent company of
First bank Limited said it would cut jobs and
focus less on providing loans to the oil
industry in a bid to reverse last year’s 82
percent slump in profit.

Managing Director/Chief Executive, Mr.
Adesola Adeduntan, FirstBank Limited
disclosed this in an interview with Reuters.
He said the bank plans 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 3 per
cent.

The bank is also targeting a cost-to-income
ratio of 55 per cent in two years time from
59 percent, he said. “ROE will be much
better than last year,” Adeduntan said.
“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.”

Vanguard investigation reveals that the
process of pruning the staff to 7000
commenced last year.
A source within the bank confirmed to
Vanguard saying, “It is not that we plan to
sack 1000 staff at a go. It was part of the
measures taken last year to enhance the
profitability of the bank. So the pruning will
be gradual and it started last year”.

FBN Holdings’ Net profit fell to N15 billion
($76 million) from N84 billion naira in 2014,
as impairments soared and Africa’s biggest
economy slowed amid a crash in the price of
crude, the biggest source of government
revenue and export earnings.
First Bank’s non-performing loans ratio stood
at 22 per cent at the end of March,
compared with 3.8 percent a year earlier.
Reducing that figure is the “number one
priority,” said
Adeduntan. The bank will do that by reducing
the proportion of it’s lending to the oil and
gas sector, currently at about 39 percent of
total loans, and focusing more on blue-chip
companies in other industries, he said.
Adeduntan ruled out any equity raising this
year, saying the bank’s capital adequacy ratio
of 17.2 percent was enough of a buffer and
above the central bank’s minimum
requirement of 15 percent. It would still be
adequate if the floor is raised to 16 percent
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,” said Adeduntan, 46, who became
CEO in January after joining First Bank as
Chief Financial officer in mid-2014. “We
generate enough internal capital,” he said.
FBN’s shares rose 5.3 percent to 3.57 naira
on Wednesday. They’re still down 30 percent
this year, more than the Nigerian Stock
Exchange All Share Index’s drop of 13
percent.


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 would get if all assets were
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.

“It’s priced in all the negative information.
For us, it can only go up.”