A corporate citizen of many firsts, First Bank of Nigeria Limited, since its establishment in 1894 has played a pivotal role in nation building and in the development of the national and regional economy by its primary role of financial intermediation, projects financing and employment creation through entrepreneurship support, its extensive corporate responsibility and sustainability programmes.
Our heritage as the nation’s foremost and largest developmental financial institution is apparent in the Group’s contributions to economic growth and development. Our developmental philosophy is reflected in our business policy and is self-evident in the composition of our diversified loan book comprising the nation’s major economic development sectors. These include agriculture, manufacturing, oil & gas, services and public sector and the creative industry, amongst others.
In line with the Government efforts to increase local content in the Oil and Gas sector in 2015, major investments that were consistent with our century-long commitment to nation building as a fundamental pillar of sustainable business development were made. As at the time we took the measured risks, in line with business realities, it was universally acknowledged as bold business moves as well as a private institution’s obligation to support focused national development.
The investments and the interventions in the pivotal sectors were well-thought out and in the right direction. However, as global economic trends have turned out, there have been contrary outcomes with such calculated risks. This is especially the case with the change in fortune of the Nigerian economy as occasioned by the sharp decline in global oil prices and output levels which resulted in foreign exchange shortages, fluctuations in exchange rates and their resultant impact on our loan portfolio. The devaluation impact and scarcity of foreign exchange resulted in significant reduction in growth projections.
It is acknowledged that the banking sector can only be as healthy as the economy itself and since the sector is not immune to the macroeconomic distortions, it is expected that the industry feels the effect of the turbulence. We have taken expected hits and have instituted robust risk-management systems and structural changes, leveraging on internal and market best practices. However, our long-standing existence, time-tested experience and strong fundamentals are indicative of the resilience and wherewithal to deal with the shocks and reposition the Bank for better stakeholders’ value.
STRONG FUNDAMENTALS
As West Africa’s premier banking services institution, First Bank is proud of its contributions to national and regional growth and development over the past 124 years. This has placed the Bank at the vanguard of national policy evolution and thought leadership in Nigeria. The FirstBank business policy has always been hinged on developmental and nation-building roles. We have our strong footprint across the nation, and increasingly across the continent. This has enabled us impact individuals, businesses, communities, public institutions and governments significantly.
Diversified Financial Services Offerings
FirstBank as an entity has always played a major role over the years in integrated national economic development. 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.
Infrastructural development:
Our Group’s investments in the Services sector are 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 the, 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.
Telecommunications:
Our Bank’s support to the telecoms industry is common knowledge. We have been at the vanguard of the famed telecoms revolution in every level of the value chain. Starting from the bankrolling and financing of the then Econet Wireless roll-out in Nigeria to involvement and participation in other financing consortium in telecommunication infrastructure and roll-out across Nigeria. We supported MainOne trans-Atlantic fibre-optic cable project through facility refinancing and all the major players in the Telecommunications sector.
Power:
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.
Oil & Gas:
We have supported the Oil & Gas sector as a demonstration of our belief and support for indigenous businesses and entrepreneurs in sync with the federal government’s local content initiative.
FirstBank played a pioneering role in the financing of the indigenous player in the sector with revolving financing line to the likes of Seplat to the tune of $179.5 million, Aiteo to the tune $295.5 million and other domestic players in the sector.
Industrialization/Manufacturing:
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 industrialization and manufacturing. We supported Dangote Cement’s African expansion and the ongoing Dangote Refinery and Fertilizer. We also supported Edo Cement Company Okpella by BUA group to the tune of N20 Billion and syndicated facility for the establishment of Golden Sugar Company Refinery in Apapa, Lagos State.
Commercialization and Privatization
FirstBank is by far the biggest financial supporter of the Federal Government in its privatization and commercialization programmes, notably, the privatization of the telecommunications and power sectors in addition to the sale of other strategic assets to core investors.
Agricultural development:
The history of our Group 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 supported Grand Cereal and Livestock Feeds with produce loan and the 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 fields of agriculture who are strategically located to identify and support agricultural enterprises covering the entire geographical regions of the country with a suite of sector/customer friendly agricultural financing products.
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. Etc.
Real sector financial intermediation in partnership with public sector institutions: Development Finance Institutions, States, Local Governments, Agencies and Parastatals of government. etc.
The bank has supported several State Governments on Agricultural Development Trust Fund Scheme, an initiative designed to provide credit facility to small scale farmers who do not have collateral.
Active support for research and development through the endowment of professorial chairs in Agriculture in some Nigerian Universities.
Under 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, FirstBank has supported 117 out of a total of 494 projects (about 25%) supported by all the banks put together, under the initiative. The projects spread across input supplies, primary production, processing and marketing. Obligors include small, medium and large scale enterprise in the agricultural value chain.
Public Sector: Self-sufficiency for States and strengthening of indigenous businesses and institutions.
The public sector and states have remained the largest employers of labour. The unsustainable reliance on federal government handouts through revenue allocation became apparent with the rapid fall in global oil prices and the dwindling fortunes of the governments. Hence, our Bank’s interventions in granting loans to states to support public utility improvement and entrench self-sufficiency. A good number of the facilities have been converted to bonds in the recently concluded bailout programme of the Federal Government.
THE UPSIDE
Capital Adequacy: Following a detailed model incorporating our future business growth strategy; potential economic shocks and the current banking group capital adequacy ratio of [17.8%], a healthy 200 basis points buffer to the regulatory minimum capital requirement for systemically important banks which came into effect in June, 2016, there are no immediate plans for any fresh equity raise. Instead, through focus on the following we will enhance the Group’s capital adequacy:
– We are implementing a priority approach towards capital allocation and optimization.
– We are reviewing our dividend pay-out policy by increasing the level of earnings retention thereby reducing dividend pay-out to focus on optimizing our balance sheet and retaining a substantial portion of FirstBank’s profit to boost capital position and drive growth
– We are inclined to implementation of asset-lite revenue generation approach.
Liquidity: With the liquidity ratio for First Bank of Nigeria Ltd at 52.7%%, we approach the future confident that our increased cautious measures will support our aspiration to maintain the lead as the nation’s financial services group of first choice. Through focus on the following we will leverage our sound liquidity position to generate a rebound in asset creation:
– Efficient Asset and Liabilities Management Committee overseeing liquidity management
– Diversified sources of funding
– Contingent funding planning
– Effective cash flow planning
Asset Quality: Despite the regulatory headwinds and business shocks, the fundamentals remain very strong with the Group’s asset quality. Through the following, we will accentuate the positive future outlook of our asset quality by:
– Expanding due diligence on risk assets targeted towards profitable transactions
– Further deepening the effectiveness of the middle office through improved credit monitoring, collection support and prompt identification of early warning signs in portfolios
– Re-instituting a more conscious risk environment through training, coaching and enforcing stricter sanctions for non-performance;
– Focus on loan and remedial management; voluntary reduction of Single Obligor Limit (SOL)
– Increased Board oversight by significantly raising the bars of credit approvals through the Board Credit Committee.
Efficiency: Building an efficient organisation is at the thrust of our new strategies and management has reiterated its commitment to driving enhanced profitability through improved revenue generation, cost optimization and shared services. Significantly, at FBNHoldings, we reduced our OPEX in 2016 by 0.8% (N2 billion) year-on-year despite inflation standing at over 18%. To effectively drive the efficiency culture, we are implementing the following;
– Exploring group shared services to optimize spends across subsidiaries and centralized data centres.
– Optimizing procurement to implement best practices
– Tightening budget controls and improving technology leverage
– Implementing an Enterprise Resource Planning/Management (ERP) framework to eliminate process redundancies
A BRIGHT FUTURE
We recognize that an institution can hardly have an outlook beyond that of its operating environment. International rating agencies postures attest to this truism. We are nevertheless optimistic that the fundamentals of our heritage have prepared the Bank for a time like this.
The adverse impact on our loan book and the distortion occasioned by the shocks in the global market place notwithstanding, the silver-lining in all of this is that the Bank’s fundamentals remain very strong and evergreen. The expanded breadth of our service and product offerings through the Holding Company structure is expected to come to the fore at a time when the commercial banking sub-sector is under significant pressure. The challenging macroeconomic environment, the dwindling oil price and the resultant impact in the widening of the funding gap for the government present opportunity for project and infrastructure finance, debt capital raising and financial advisory offered by our Merchant Banking and Asset Management group. Similarly, the insurance business of the Group continues to ramp-up in its growth trajectory, supported by the seamless integration of the acquired general insurance business. All of these are in addition to the effort of the Bank to fully integrate its West African operations to our FBN Bank (UK) Ltd to drive significant growth in trade finance.
People and Leadership
– Over 20,000 staff strength, the highest in the industry
– New leadership among the industry’s best
– Attracting and retaining the best hands in the industry
– Increased investment in people and processes
– A pool of the industry’s top thought-leaders
– Right skill sets and experience
Awards and accolades
– Most valuable bank brand, for the sixth time in a row (The recent being February 2017)
– Best Retail Bank in Nigeria, for the fifth time in a row
– Best Commercial Bank in Nigeria
– First bank to attain N100M E-banking transaction in a month
– Number One bank in SME funding
– The only Bank that won the NSE President’s Merit Award a record 13 times (It should be noted that some of our peers desist from entering for these rigorous awards as the parameters could be demanding of significant disclosures and transparency)
Products, Services and Initiatives
– Premier and largest commercial banking institution in sub-Sahara Africa (ex. South Africa)
– Over 860 business locations
– Over 12 million customer accounts
– Footprints across Africa, Middle East and Europe
– Bouquet of financial products and services in SME, Youth, Affluents and large corporates
– Prime driver of financial inclusion
– Prime driver of sustainability (Sustainability Centre) first of its kind in Nigeria
– History of empowerment initiatives and support
First with Nigeria’s Progress and Growth
Without doubt, Nigeria’s growth and progress is assured with the solid and unwavering support of FirstBank’s solid, granite pillars of vision, performance and excellence.
