Tokunbo Abiru, MD, Polaris Bank

BY EMEKA EJERE

Polaris Bank Limited at the weekend left no one in doubt that it is on the right track to its mandate of a positive turnaround with a first Audited IFRS 2019 compliant financial result showing a gross earnings figure of ₦150.8bilion and a Profit Before Tax (PBT) of N27.8billion within the first full year of operation. This is consistent with the industry average of financial institutions of its size.

The remarkable achievements coming in the first year of operations of the institution, industry analysts say, is a clear validation of regulatory induced interventions in the nation’s history. However, the performance of the bank can be attributed to the huge transaction support of Lagos state, which is an institutional shareholder as well as the loyalty of its core customers. With legacy national bank in its fold, most south westerners still have a certain nostalgic association with it.

The bridge bank closed the 2019 financial year with Total Assets of N1.1trillion and Shareholders Fund of N83billion. A review of the results showed positive performance across most major key prudential ratios, including capital adequacy, liquidity, Non-Performing Loans which is now significantly in compliance with stipulated regulatory requirements.

The result shows that Polaris Bank recorded 14 per cent Capital Adequacy ratio and 81percent liquidity ratio both of which are well above regulatory requirements, demonstrating strong prudential compliance and assuring a strong capital buffer, careful liquidity management and resilience to regulatory headwinds.

The bank’s customer deposits stood at N857.9billion even as the lender continues to focus on stable, low-cost deposits and well-diversified portfolio devoid of high concentration. Similarly, the loan book stood at N261billion in December 2019, providing the bank with the desired leg-room to accommodate the required growth in risk assets to support the nation’s economic growth.

The bank equally recorded a Return on Equity (ROE) and Return on Assets (ROA) of 33.0 per cent and 2.4 per cent respectively for the year ended December 2019. Polaris Bank in a statement attributed the result to the turnaround initiatives undertaken by its leadership led by Mr Adetokunbo Abiru.

In just one year after the Central Bank of Nigeria (CBN), and the Assets Management Corporation of Nigeria (AMCON), took over Skye Bank and renamed it Polaris Bank with Abiru as its managing director and chief executive officer, Polaris Bank’s narrative has continued to justify that regulatory move by the apex bank.

Recall that on July 4, 2016, the CBN intervened in the management of the Skye Bank Plc by reconstituting the board of directors, shoring up the bank with N700bn capital injection. The regulatory action on the bank led to the sack of its chairman, Mr Tunde Ayeni, all non-executive directors on the board, as well as the managing director, Mr Timothy Oguntayo, deputy managing director, and the two longest-serving executive directors on the management team.

Skye Bank was one of the banks that emerged after the bank consolidation exercise which ended on December 31, 2005, and led to the reduction of Nigerian banks from 89 to 26. The legacies banks that formed Skye Bank are Prudent (National) Bank, EIB International Bank Plc, Bond Bank, Cooperative Bank, and Reliance Bank.

The new bank later acquired Mainstreet Bank, a bridge bank formerly Afribank in 2014. Stakeholders in the banking sector said that the problem of Skye Bank started due to the challenges it inherited from Mainstreet Bank as well as the refusal of bank executives to abide by CBN rules and regulations, especially the bank’s funding of the chairman’s investment in the power sector privatization in 2012.

On September 22, 2018, the CBN again intervened in the ailing Skye Bank and the operating licence of the bank was revoked to give way to Polaris Bank Limited, a bridge bank created in consultation with the Nigerian Deposit Insurance Corporation (NDIC) to assume the ownership of the assets, all deposit liabilities and some other liabilities of distressed and defunct Skye Bank.

The bank’s share capital had run into negative territory due to bad loan deals. It was also in urgent need of recapitalization, a need its shareholders could not meet.

CBN Governor, Mr Godwin Emefiele, who announced the revocation, said: “Skye Bank requires urgent recapitalization as it can no longer continue to live on borrowed times with indefinite liquidity support from CBN. We have decided to establish a bridge bank, Polaris Bank, to assume the assets and liabilities of Skye Bank.”

Emefiele further said, “The strategy is for AMCON to capitalise the bridge bank and begin the process of sourcing investors to buy out AMCON. By this decision, the license of Skye Bank is hereby revoked.”

Accordingly, the apex bank gave the board a clear mandate to turn the institution around positively within the shortest possible time.

Towards the new mandate

Since becoming the managing director of the lender, Abiru has spearheaded several growth initiatives which have placed the bank on an upward trajectory. The Abiru-led Polaris team has continued to implement the July 2016 regulatory intervention to include entrenching sound corporate governance and risk management practices and transforming Polaris into fully-fledged retail and commercial bank with strong digital backing.

The bank has invested significantly in technology with copiously integrated service models enabling customers to enjoy banking services through a wide range of channels. Today, Polaris Bank can boast of a strong market share, thanks to several transformative business initiatives.

Mr Abiru has successfully implemented cost management initiatives which have enhanced liquidity and efficient service delivery to the bank’s customers. Through his aggressive recovery initiatives, the bank has been able to recover over N200 billion of outstanding bad loans within the shortest period. Also, under his watch, the bank has been able to reach settlement and restructuring agreements with many of the chronic bad debtors resulting in substantially improved payments and prospects of future recoveries.

In line with the bank’s broad mandate which includes cost management and optimisation, as well as divestments to improve the institution’s financial position, the Abiru-led leadership of the bank has embarked on several initiatives aimed at restructuring and repositioning the bank.

Some of the initiatives include branch rationalisation, review of service contracts and cash management operations which have resulted in hundreds of millions of financial savings. Also, through some of the initiatives, the bank has successfully settled many matured trade and bilateral obligations while restructuring outstanding balances with the relevant institutions and counterparties.

Under Mr Abiru’s watch, the bank has divested from four local subsidiaries, releasing a total cash value of N6.2 billion. Polaris Bank under Abiru has also continued to promote the CBN’s National Financial Inclusion Strategy aimed at reducing the number of eligible adult Nigerians that are excluded from the formal financial system from 46.3 per cent to 20 per cent by the year 2020.

The lender has also made available different credit and funding options to small scale entrepreneurs and business owners, operating in the informal sector, to bring them into the mainstream financial system.

The bank has launched its revamped mobile banking application upgraded with new and exciting user-friendly features for a more convenient banking experience. With the application, customers can enjoy many benefits and access self-service options, such as easy account opening, convenient self- booking and liquidation of fixed deposits, an expanded list of bill-payment options and easy activation of standing instructions and recurrent future payments.

These and many other moves leveraging technology and building a culture of innovation are fast repositioning the bank. Little wonder today, Polaris Bank’s branches are witnessing heavy traffic of customers to carry out transactions, open bank accounts and experience the innovative trends that the bank has introduced to its business.

Commenting on the bank’s performance Mr Abiru said: “The emergence of Polaris Bank on September 21, 2018, has heralded new dawn as it laid the foundation for institutional competitiveness and service innovation in Nigeria’s challenging banking space.”

He further noted: “Our strategy which anchors on rebuilding the franchise and strengthening the balance sheet position provides enablers for ongoing initiatives towards lean operations and efficient balance sheet management devoid of capital erosion risks.

The chief executive officer expressed satisfaction with the bank’s new corporate governance regime. “We shall continue to run an ethically governed Bank upholding sound risk management practices and proactively taking measures to mitigate the impact of the adverse business environment while the Board and Management continue to guide the Bank towards a path of sustainable growth.

In a statement, the bank’s head of Corporate Communication, Mr Nduneche Ezurike, noted: “Polaris Bank is a future-determining Bank committed to the delivery of industry-defining products, services, and digital platforms across all the sectors of the Nigerian economy.

“The Bank is a member of the United Nations Environment Programme Finance Initiative (UNEP FI), which seeks to engage the private sector and the global financial sector to help create a financial sector that serves people and the planet while delivering positive impact.”

Going into the year 2020 and despite the challenging macroeconomic environment, the bank says it is poised to reap the benefits of its investment in both the capacity of employees to improve service experience and in critical infrastructures that will support the digitization of its operations.