• Thursday, July 25, 2024
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First Bank: Staying ahead with technological reinvention

Digital technology critical to Nigeria’s financial system- First Bank boss

In his book, “The Age of Agile,” Steve Denning, former programme director of knowledge management at the World Bank, discusses a “Copernican revolution” of management that emphasises why innovations are no longer optional, but a necessity to the success of traditional banks.

This requires an organisational cultural transformation, Denning validly argues, and especially at banks that have long been driven by traditional metrics. The Denning scenario fundamentally captures the FirstBank story.

With a rich history sprawling back to 1894, First Bank under the leadership of Adesola Adeduntan is reinventing itself and taking on its biggest disruptors—fintechs and telcos by adopting innovative technologies as well as introducing more customer-oriented and digital experiences to its customers.

Related to its efforts, the bank recently unveiled a fully automated branch FirstBank Digital Experience Centre, which has added to its bouquet of digital products such as USSD banking, FirstMobile, WhatsApp banking amongst others.

For Adeduntan, at the heart of an agile and resilient business is technology-enabled innovation that allows organisations to stay ahead of the curve.

“The banking industry is very dynamic,” he says in an article published by KPMG, a multinational professional services network, and one of the Big Four accounting organizations.

Growing strength

First Bank’s customer accounts have grown from about 10 million in 2015 to over 36.9 million in the first quarter of 2022; the bank is also the second-largest issuer of cards in Africa with over 11.9 million issued cards, and onboard over 18.6 million active customers on FirstBank’s digital banking platforms.

The tier one bank ranked 2nd in the Nigerian Consumer Digital Banking Satisfaction Index by Agusto & Co, won Best Banking Brand, Nigeria Award by Global Brand, and was awarded Investment Bank of the Year in Nigeria by BusinessDay.

The bank reported further improved performance in its half-year financial results, with its profit after tax amounting to N56.5 billion in the first half of 2022, the highest half-year profit reported by the bank in 11 years.

Beyond digital banking, First Bank’s cost-to-income ratio, a ratio used to determine how efficiently a company is being run and how it earns its own organic income, stayed at an impressive rate of 68 percent in the first half of 2022, an improvement from 56.5 percent in 2018.

“Amidst a challenging operating and dynamic regulatory environment in H1 2022, the Commercial Banking Group remained focused on executing key initiatives to position the Group for improved profitability in FY2022. Our half-year results further reinforced our drive towards our ‘Quantum Profitability Leap’ agenda,” Adesola Adeduntan, chief executive officer of First Bank of Nigeria Limited said.

First Bank also recorded a net interest income of N152.9 billion, which was 49.3 percent higher than the N102.4 billion recorded in the corresponding period of 2021.

As a result of years of strategic restructuring of its balance sheet and operations, its gross earnings also moved northwards by 22.43 percent to N338.5 billion in H1 2022, and its total assets were up 18.7 percent to N9.5 trillion as of June 2022, as against the N8.02 trillion recorded the previous year, just as its customer deposits also climbed by 24.1 percent to N6.3 trillion, up from the N5.1 trillion recorded the previous year.

Read also: Banks’ credit rising despite CBN’s tightening stance

The recent turnaround and improvement in the non-performing loans have also been a major boost in its quest to further improve profitability and reinforce its leadership of the financial services industry in Nigeria.

The bank’s customer loans and advances also improved by 43.4 percent to N3.38 trillion in the year under review, up from N2.36 trillion the previous year.

The bank has also driven its NPL ratio significantly down from double-digit in 2016 to a single digit of 5.4 percent in the first half of 2022.

The Bank remains committed to its transformation drive, which has resulted in a stronger balance sheet and better asset quality with non-performing loans closing at 5.4 percent in H1 2022. Similarly, risk management capacity remains robust in the Bank supporting the drive for enhanced earnings for sustainable capital accretion.

Bankers Magazine: FirstBank Best Performing In Nigeria

Its new winning streak came to the fore recently when it was recognised by The Banker Magazine, a publication of Financial Times Limited, in the Top 100 African Bank Rankings 2022. The award showed that FirstBank is leading the Nigerian table in four areas – the highest achieved by any Nigerian bank.

According to the ranking, which drew on the 2021 financials, the bank tops its peers in Nigeria in terms of overall performance, profitability, efficiency and return on risk. It was also second in growth ranking.

The magazine, which explained that its Top 100 African Banks ranking for 2022, demonstrates a broad return to stability by African banks after a torrid year for the continent’s largest lenders placed FirstBank among other banks in Nigeria because it happened to be the only bank that led in four areas.

Euromoney Rankings: FirstBank, Market Leader

In addition, in 2022, Euromoney Market Leaders, an independent global assessment of financial service providers conducted by Euromoney Institutional Investor Plc, crowned FirstBank as a market leader.

The bank was rated as a tier-one bank in the areas of corporate and social responsibility (CSR).

Not only that, but FirstBank also emerged as a market leader among the tier-one banks in the area of Environmental, Social and Governance (ESG).

In the area of corporate banking and digital solution, FirstBank was highly regarded, while it was crowned as a notable player in SME Banking for the period under review.

Fitch Ratings

Fitch Ratings upgraded the long-term issuer default ratings (IDRs) of FirstBank Limited and that of its parent company, First Bank Holdings Plc to ‘B’ from ‘B-’, citing key performance indices including improved capitalization, asset quality, and healthy profitability.

According to Fitch, “First Bank’s impaired loans (Stage 3 loans under IFRS 9) ratio has declined significantly to 5.6 percent at end of H1 2022 from a peak of 25 percent at the end of 2018 as a result of sizeable write-offs, successful restructurings and recoveries and, more recently, the flattering effect of strong loan growth. Stage 2 loans remain significant (15 percent of gross loans at end of H1 2022) but Fitch expects these to decline as oil and gas exposures return to performing status. Specific loan loss allowance coverage of impaired loans (49 percent at end of H1 2022) is acceptable in view of its collateral levels.”

The rating agency further noted that FBN Holdings’ fixed-charge coverage (FCC) ratio (19.1 percent at end of H1 2022) has been on an upward trend in recent years, as a result of strong internal capital generation, which has been influenced by a modest dividend payout ratio, adding that “impaired loans net of specific loan loss allowances has declined as a share of FCC in recent years to a moderate 12 percent at end of H1 2022. Pre-impairment operating profit is sizable (an annualised 5.1 percent of average gross loans in 1H22), providing a reasonable buffer to absorb LICs without affecting the capital.”

The tier-one bank which has been in operation for more than 128 years has received recognition for its dedication to and successes in banking, corporate philanthropy, socioeconomic development, support for enterprises, and commercial activities.

In the first five months of this year, the bank gained global recognition when Superbrand International conferred on FirstBank the Superbrand Award 2022 for “maintaining a formidable brand perception for 128 years”.

More Awards

Also, International Investor Awards recognized FirstBank as the best bank in Nigeria for the year 2022. This followed an independently conducted survey and data from Thomson Reuters. The same survey and data from Thomson Reuters, International Investor Awards also presented FirstBank with Best Banking Digital Transformation in Nigeria for the year 2022.

FirstBank won Best Digital Transformation Bank in Nigeria at the International Investor Awards 2022, a print and online publication that provides insights, news, and visual informative pieces with topics ranging from world markets, investing opportunities, industry analysis and so much more.

Recently, First Bank of Nigeria Limited announced its commemoration of the 2022 edition of Customer Service Week scheduled to be globally celebrated on October 3 to 7, 2022 theme, ‘Celebrating Service’ which will be marked across its the bank’s subsidiaries in over half a dozen countries, which include FBNBank UK, FBNBank Ghana, FBNBank Senegal, and FBNBank Gambia. Others are FBNBank Guinea, FBNBank DRC and FBNBank Sierra Leone.

Last year, the bank was similarly honoured, with the Most Innovative Retail Banking App Nigeria 2021 by Global Banking and Finance Awards, African Bank of the Year 2021 and Innovative Banking Product of the Year 2021 by African Leadership Magazine Awards and Best Internet Banking Nigeria 2021 by International Business Magazine added to its swelling profile.