First Bank Lender to cut 1,000 jobs following drastic slump in profit

Growth in Nigeria also decelerated sharply 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 (IMF).

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First Bank Chairman, Ibukun Awosika play

First Bank Chairman, Ibukun Awosika

(Bella Naija)
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Media reports confirm that 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 an attempt to reverse the 2015 financial year’s 82 per cent slump in profit.

According to Nigeria CommunicationsWeek, 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 Mr. Adesola Adeduntan, CEO of First Bank of Nigeria Limited, FBN’s main subsidiary.

Adeduntan said the company was also targeting a cost-to-income ratio of 55 per cent within the next two years’ from 59 per cent, Bloomberg reported.

ROE will be much better than last year,” he told Bloomberg 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,” Adeduntan added.

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First Bank's net profit crashed 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 in Nigeria also decelerated sharply 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 (IMF).

The 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. Adeduntan said that reducing that figure is the “number one priority”.

He said the bank would achieve that by reducing the amount of its lending to the oil and gas sector, which currently stands at about 39 per cent of total loans, and focusing more on blue-chip companies in other industries.

Adeduntan ruled out raising any equity this year, stating that 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.

First Bank's valuation trails that of its main competitors such as Guaranty Trust Bank Plc and Zenith Bank Plc. Its stock trades at 0.22 times the 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.

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