First Bank repositions, to up economic stake

On September 7, 2015, the Board of FBN Holdings Plc announced a new team for its crown jewel, First Bank of Nigeria. Three months later, specifically January 1, 2016, the pivot of that board, comprising  Ibukun Awosika, the Chairman;  Adesola Adedutan, Managing Director; and Gbenga Shobo, Deputy Managing Director, started the interesting journey of restructuring and repositioning FirstBank in its pride of place as the number one bank in Nigeria.

During a recent interview with newsmen in her office, the Chairman of the board, Ibukun Awosika, talked extensively about the journey, the corporate objectives and strategic thrust. Appraising the enormity of the responsibility entrusted to her board and management team, she said, “When you are handed an historic organisation of 122 years, with such strategic and significant importance to the economy of your nation and many stakeholders across your areas of influence, you do not take such an assignment lightly. An institution like FirstBank comes to you with a legacy that includes strength, reliability, resilience and trust. But it also comes with the liabilities of an institution that has existed for so long, even though it has consistently re-invented itself over the years.”

Recounting the mandate they were given vis-à-vis how they have fared in this regard, Awosika said, “Our Team has the mandate to reset the institution for competitiveness in a fast-changing, technology-driven landscape. We started with the vision of embracing and celebrating our strength, cleaning up our weaknesses, and creating a new organisation that will be capable of continuing its leadership role in the industry.

“In the last 16 months, we have invested resources in restructuring the corporate governance of the institution, both at the board and management level, through the addition of individuals with the right skills and value system whom we carefully selected and headhunted from within and outside the organisation to join our team. Indeed this is an ongoing trend across the entire FBN Holdings group.”

Beyond strengthening the Bank’s ranks in key areas, the board also underlined its commitment to transform the bank’s risk management approach towards sustainable improvement in asset quality, enhancing revenue generation capacity and optimising costs by leveraging technology to drive innovation, as it re-positions for improved performance.

“We have worked with the assistance of the best support minds and organisations to rejig all our processes and procedures across the various segments of our business in order to achieve the desired goal. We have made huge investments in complementary technology to enable us achieve the efficiency and reliability that we are determined to deliver. We are doing this so as not to be restricted by human limitations,” Awosika said.

“Even though as a bank, through time and age and a sense of responsibility to society, we are belaboured with brick and mortar (branches), we are creating a lean and smart organisation, despite our legacy physical asset. Proof of how much we have achieved through this process is our cost-to-income ratio, which traditionally has trended in the 60s, but as at the end of 2016 financial year, we have succeeded in bringing it down to about 51%, with our goal being able to keep it consistently below 50%.” Considering the industry average ratio for banks in the country is 60.2%, this is no mean feat.

Furthermore, the bank’s gross earnings grew by 13.5% to N478.2 billion, compared to N421.2 billion in the previous year. This owed much to the 72.2% increase in its non-interest income to N127.5 billion as against N74.0 billion in December 2015.

Reflecting on the macro-economic factors and challenging operating environment, which ideally should pose some challenges to their performance, Awosika was upbeat in her analysis, “It is obvious we took over in a period of headwinds locally and internationally, whether on the regulatory side or fiscal point of the economy. And, as a bank with operations in seven African countries, UK and Paris, global factors also impacted us one way or the other. However, despite our baptism of fire and brimstone, a look at our top line will show we are competitive within our spheres. We are firmly resolved that we will be a transparent and accountable team.” And true to word, the Bank returned a stronger profit before tax of N10.7 billion in 2016, a significant rise from its N2.8 billion in the year before, contributing 91.4% to the gross earnings of its parent company (FBN Holdings) and 38.4% profit before tax to the Group’s bottom line.

Shedding light on some of the not-so-popular moves she and her team had to make, she said, “In order to build a solid foundation and a stable organisation for the future, we set out a plan to clean up over a short period, which is exactly what we are doing, and the results show that we are on track. We are confident that as we implement our strategy over our planning cycle and our cleanup mission is achieved, all our stakeholders will have reason to celebrate, as true value within the institution is realised as we go forward.”

Renowned for its role in nation building and development of the national and regional economy through financial intermediation, projects financing, employment creation via entrepreneurship support, corporate responsibility and sustainability programmes, FirstBank boasts an exclusive heritage of being Nigeria’s largest financial institution, with proven commitment to national development, “even though we have paid a high price for that sometimes.” she said.

The bank continues to demonstrate its faith in the nation by investing a significant proportion of its loan portfolio in Nigeria’s present and future. Its developmental philosophy is self-evident in the composition of its loan book, which is diversified across major economic development sectors and sub-sectors including agriculture, manufacturing, oil & gas, services, public sector, amongst others.

In the words of Awosika, “There are many critical points to FirstBank, as an institution, we have always played the role of a major facilitator in nation building. We are very much committed to that role in many ways.”

As a firm believer in the Nigeria brand, FirstBank has always taken a patriotic bet on the country.  The Bank continues to demonstrate its faith in the nation by investing a significant proportion of its loan portfolio in Nigeria’s present and future. This is reflected in the composition of the FirstBank loan book which is diversified across major national focus sub-sectors.

 “Our investments in the Services sector were hinged on contributions to building infrastructure and improving power generation through lending to investors and off-takers. FirstBank participated in financing the new Lekki-Epe Expressway, Tejuosho Shopping   Complex, Aswani Shopping Complex and the financing of, several housing estates across the nation. There is infrastructure financing arranged by the debt solution of FBN Capital – raising money for the acquisition and refurbishment of Egbin Power Station, acting as Mandated Lead Arranger we supported the funding of Accugas project to the tune of $100 million dollars.

“Our impressive dossier in the Power sector has endured over the years. Further to the passing of the Electric Power Sector Reform Act in 2005, we continue to support players in the entire value chain ranging from gas suppliers and aggregators, generation, transmission and distribution companies. We continue to partner with operators and ancillary service providers, as these are sure bets for driving the economy at all levels. We supported Amperion for Geregu plant acquisition and the Pacific Group for Omotosho power Plant acquisition.

“The history of our Bank is deeply rooted in the support of agricultural development. Today, FirstBank has a dedicated desk and team supporting players in the agricultural sector, through capacity building and financing. Early this year, 2017, we hosted a large congregation of players in the agriculture ecosystem to an ‘Agric Fair’ with the Minister of Agriculture in attendance, as part of our continued support to the Government drive of economic diversification and food sufficiency. We support Grand Cereal and Livestock feeds with produce loan and Agro allied business of Chi Group. We also supported Amo Group through N4 billion facility in Cattle ranching, meat processing facility and other large scale agricultural projects by the group.

“The Bank has a dedicated team of agricultural professionals specialising in various field of agriculture who are strategically located to identify and support agricultural enterprises covering the entire  country with a suite of sector and customer centric agricultural financing products

The Bank has a large base of existing small, medium and commercial agribusiness clients across Nigeria operating in all segments of the agricultural value chain covering primary production, storage, processing, packaging and agro export, we don’t only support the big players we support across board”.

Awosika further shared that real sector financial intermediation by the bank is in partnership with public sector institutions: Development Finance Institutions, States, Local Governments, Agencies and Parastatals of government, for example

the Bank has supported several State Governments on the  Agricultural Development Trust Fund Scheme, an initiative designed to provide credit facility to small scale farmers who do not have collateral.

This is further enhanced by the active support for research and development through the endowment of professorial chairs in Agriculture in some Nigerian Universities under the FirstBank Endowment Programme. Sustained since its launch in 1994 the endowment programme, a first of its kind in Nigeria has over 14 tertiary institutions as direct beneficiaries.

Another example cited was that of the Commercial Agriculture Credit Scheme (CACS), the FGN/CBN initiative designed to provide long tenored credit facilities to commercial agricultural enterprises at single digit interest rate where FirstBank has supported 117 out of a total of 494 projects which works out at approximately 25% of total market support from all the banks in the country.

“We have continued to support the Manufacturing sector to accelerate the revival of the local production, create employment and boost export in line with the diversification objective of the Country, as the nation can only make meaningful progress through hands-on industrialisation/manufacturing. We supported Dangote Cement African expansion and on-going Dangote Refinery and Fertilizer plant. We also supported Edo Cement Company Okpella by BUA group to the tune of N20 billion and syndicated facility for establishment of Golden Sugar company refinery in Apapa.”

Talking further about the Board’s plan, Awosika expressed optimism about the steady revenue growth of the Bank and its ability to improve efficiencies as planned in their cost optimisation drive. She is confident this will result in enhanced and sustained profitability.

She also detailed the deliberate steps her team is taking towards better quality assets, as they push remedial efforts and portfolio resolution challenges, albeit within a challenging environment. “We will continue to see through the various initiatives we have instituted and the governance model developed for enhanced oversight as we expect improvements in asset quality in the short to medium term.”

As the Bank moves to retain its leadership position in the industry, leveraging technology to drive innovation, there is no better time than now to stake such a claim, seeing that 47% of all its transactions were done electronically as at the end of March 2017.

“And with about 14 million active customer accounts, over two million subscribers on our mobile app, FirstMobile, more than two million enrolment on our USSD platform with over N50b transaction to date and over 2,700 ATM locations. “FirstBank is at vantage position to achieve its goals of signing 30 million customers by 2020 – that is 17 million more than what it presently boasts. Indeed it is noteworthy that FirstBank sustained its leadership as the only financial institution in Nigeria to achieve 100 million electronic-banking transactions per month.”

Adjudged the Bank most used by SME operators in Nigeria during a recent nationwide survey, and number one in the overall rating of Best Banks for SMEs, FirstBank has a lot of things going in its favour for many years to come. And it can only get better with the board and management headed by Ibukun Awosika, a seasoned entrepreneur and board veteran, pulling its strategic strings.