We won’t lend above N30m to a single borrower, says FirstBank

FELIX OLOYEDE

As part of efforts to reduce First Bank Nigeria Limited’s impairment provision, which stood at N226 billion at the end of 2016, the lender has reduced its single obligor limit to N30 million from N90million.

The Managing Director, First Bank of Nigeria, Dr Adesola Adeduntan, revealed this at FBN Holdings Plc 5th Annual General Meeting (AGM) held in Lagos on Friday.

He explained that the bank has restricted the granting of loans to an individual customer to an amount not greater than N30 million to minimize individual customer exposure and scale down Non-Performing Loans (NPL’s).

First Bank’s boss noted that the bank’s management was working aggressively at cutting back 2016 loan impairment charges, adding that the bank, a key component of its parent holding company, had taken cognizance of past events and the need to do things differently.

“Impairments going forward will remain relatively high but not in the magnitude of 2016,” Adeduntan said.

According to him, the deposit money institution would be adopting digital banking as one of its key strategies for growth, saying that the management was transforming the institution from credit lending to transaction lending.

He said that the board and management had strengthened various risk control measures in the bank aimed at lowering risk from a variety of sources such as sector concentration, single obligor bias and market uncertainty.

He added that the bank had overhauled the credit and risk management structure, strengthened the oversight and approval processes to tackle bad loans.

Adeduntan said that a combination of the strategies would ensure that the bank did not create bad loans in the magnitude of the past.

Meanwhile, Mr U.K. Eke, Group, Managing Director, FBN Holdings has reassured shareholders that the group has put in place structures that would guarantee them better returns on their investment in 2017.

He stated that the group used the recessionary period to clean up its books so that when the economy rebounds it would be in a position to improve dividends to shareholders.

Eke added that owing to the challenge of rising costs which the group encountered as a result of rising  inflation, it had to allow the commercial bank to retain its earnings instead of asking shareholders for fresh funds.

Shareholders therefore endorsed a dividend of N7.18 billion declared by the company,  amounting to 20k per share, which was 33 percent higher than the 15k per share paid in the at the end of 2015.

The Holdco’s gross earnings was 15.7 percent to N581.8 billion in 2016 against N205.8 billion in the corresponding period in the previous year with net interest income increasing by 14.8 percent to N304.4 billion and non-interest income up 68.9 percent to N165.5 billion. The company cut its operating expenses -0.8 percent to N220.9 billion during this period.

FBN Holdings’ profit after tax rose 6.3 percent to N22.9 billion during the period under review as customers deposits increased to N3.1 trillion, 4.5 percent better than N3 trillion in 2015 and customer loans and advances rose 1.7 percent to N2.1 trillion in 2016. Its earnings per share also increased to 53 kobo from 44 kobo in 2015, indicating a 20.4 rise.

Mr Sunny Nwosu, the National Coordinator Emeritus, Independent Shareholders Association of Nigeria (ISAN), commended the company for declaring dividend despite high impairment provisions.

Nwosu said that the shareholders appreciated the dividend considering a tough business environment and higher loan loss charges.

He, however, tasked the company’s board and management to devise strategies aimed at fighting the impairment to improve operating profit.

The shareholder said that the company should go out aggressively to recover the loans for better dividends payment in the future, adding that this was the best time to buy into the company in order to be part of its success story.

Mr Nona Awo, another shareholder expressed concern over the company’s huge unclaimed dividends figure.

Awo stressed the need for collaboration between the registrars and investor relations officer to  drive down the figure.

He added that the company needed to increase its customer deposit base and reduce non-performing loans.

Mr Bayo Adeleke, the immediate past ISAN Secretary said that FBN Holdings was resilient as it had passed through many storms.

Adeleke said that the new leadership of the company had been able to turn things around.

He said that the company needed to support the Small and Medium Enterprises (SMEs) as the nation’s engine of development through lending.