Finance

FirstBank: A triumphant Return to the Nigerian Banking Frontline

Published

4 years ago

October 11, 2022

admin

The story of Corporate Nigeria in 2022, cannot be complete without a chapter on the incredible performance of First Bank of Nigeria Limited, which saw the hitherto encumbered bank now returning to the top of the ladder of the Nigerian banking industry, amid a harvest of international laurels, writes Festus Akanbi

By December this year, Nigerian quoted companies will begin to upload their full year 2022 results in compliance with the dictates of the principle of disclosures to regulators, investors and customers as enshrined in the act of Corporate Governance.

While the waiting game for the release of the more detailed full-year results continues, analysts said that bookmakers can only assess the current level of profitability, efficiency and recovery of these companies based on their half-year reports which began to hit the various media platforms from July this year.

For FirstBank, a subsidiary of the behemoth FBN Holdings Plc, the 2022 operation year has been characterised by a superlative performance which analysts believed signposts the confirmation of the bank’s return to the frontline of the Nigerian banking industry following its 2021 equally stellar performance.

From its half-year 2022 reports, which show a remarkable turnaround, and the ability of the management of the bank not only to resolve old corporate governance issues but to also return the bank to the path of profitability, it has been proven beyond any reasonable doubt that FirstBank has freed itself from old encumbrances and it is back to its old trajectory of breaking boundaries and being a pacesetter in the Nigerian banking industry.

For instance, analysts who believed that FirstBank’s current excellent performance is a reaffirmation of the new era of a return to greater and better times ahead are quick to point to the bank’s half-year 2022 results which proved the solidity of the financial institution and confirmed that it is back in form as a formidable industry leader.

Reinforcing Quantum Profitability Leap Agenda

For instance, in its half-year 2022 scorecard, FirstBank recorded a 22.6 per cent year-on-year growth in gross earnings to N338.5 billion while net interest income was up 49.3 per cent year-on-year to N152.9 billion respectively.”

The bank’s Managing Director/Chief Executive, Adesola Adeduntan who gave this figure disclosed that “Amidst a challenging operating and dynamic regulatory environment in the half year 2022, the commercial banking group remained focused on executing key initiatives to position the group for improved profitability in the full year 2022. Our half-year results further reinforced our drive towards our ‘Quantum Profitability Leap’ agenda.”

Adeduntan said, “On the back of the impressive growth recorded in our top line, our profit before tax recorded a strong growth of 40.0 per cent year on year to N60.0 billion, whilst profit after tax also grew by 42.3 per cent year on year to N53.3 billion as the bank continues to reap the dividends of the successful restructuring of our balance sheet and revamping of our risk management architecture.”

“We continue to record progress in driving down our non-performing loan ratio which now stands at 5.4 per cent at the end of H1 and we are on target to bring it within the regulatory limit of 5 percent by end of full-year 2022.”

Awards and Recognitions: FirstBank’s Leading the Pack

In terms of recognition, there is no doubt that the ongoing transformation in FirstBank is globally recognised when one considers the harvests of awards and recognitions that are already pouring in for the bank.

Analysts said the awards and recognitions, which include those from the Fitch Ratings and The Banker awards and Euromoney rankings are testimonials of FirstBank’s consistent performance.

Fitch Rerating

Analysts maintained that the current Fitch rerating of FirstBank aligns with ratings of other global agencies (such as S&P: B- with a stable outlook; Moodys: B2 with stable outlook) – a confirmation of what industry peers already acknowledge – back to leading the pack.

On September 16, 2022, Fitch Ratings announced the upgrade of FBN Holdings Plc’s (FBNH) and First Bank of Nigeria Ltd’s (FBN) Long-Term Issuer Default Ratings (IDRs) to ‘B’ from ‘B-‘, and according to the rating agency, the Outlooks are Stable. Fitch has also upgraded their Viability Ratings (VR) to ‘b’ from ‘b-‘.

It explained that the upgrade of the Long-Term IDRs follows that of the VRs, reflecting that corporate governance irregularities publicly raised by the Central Bank of Nigeria (CBN) in April 2021, including two longstanding related-party exposures, have largely been addressed and therefore risks to capitalisation have receded, helped by strong internal capital generation since the irregularities were raised.

Governance Issues Laid to Rest

Following its monitoring of the Bank’s corporate Banking endeavours within the last year, the rating agency gave FirstBank a clean bill of health saying the bank’s governance irregularities have been addressed and according to the management of the bank, “the two related-party exposures highlighted by the CBN, which included equity and credit exposures to two companies of whom FBNH’s previous chairman was also chairman, have largely been disposed of and repaid. Fitch understands from management that FBNH and FBN have not been subject to penalties about irregularities raised by the CBN in April 2021 and no further irregularities have been raised.”

It also attests to the solidity of the bank, affirming that FBN is the third-largest bank in Nigeria, representing 11% of domestic banking-system assets at the end of 2021.

Another reason for the high rating is the fact that the bank’s improved asset quality since FirstBank’s impaired loans (Stage 3 loans under IFRS 9) ratio has declined significantly.

FirstBank also boasts of a Stable Funding Profile. For instance, FBN’s customer deposit base (76% of total funding at end-1H22) comprises a high share of retail deposits (64% at end-2021) and current and savings accounts (81% at end-1H22), supporting funding stability and a low-cost of funding. Depositor concentration is fairly low. Liquidity coverage is comfortable in local and foreign currencies.

Bankers Magazine: FirstBank Best Performing in Nigeria

It is also not a coincidence that FirstBank was rated first among its peers in Nigeria by Bankers Magazine, a publication of the Financial Times.

The Top 100 African Bank Rankings 2022 recently released by The Banker shows FirstBank leading the Nigerian table in four areas, the highest achieved by any Nigerian bank; only FirstBank leads in four areas. The rankings, based on the end of year 31 December 2021 audited financials of all banks in the Top 100, reveal FirstBank’s ranking as number one in Nigeria in terms of Overall Performance, Profitability, Efficiency and Return on Risk.

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.

First Bank of Nigeria Limited leads its peers in fifth place overall, displacing Guaranty Trust Bank, now in seventh place. Access Bank ranks in the eighth position, with Zenith Bank in 10th place.

Euromoney Rankings: FirstBank, Market Leader

In addition, in 2022, Euromoney Market Leaders, an independent global assessment of the leading 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.

FirstBank was named “Best Bank Brand in Nigeria” for six years in a row – 2011 to 2016 – by The Banker magazine of the Financial Times Group; it was awarded “Most Innovative Bank in Africa” in the EMEA Finance African Banking Awards 2014; it has clinched the “Best Bank in Nigeria” award by Global Finance Magazine 15 times and the “Best Private Bank in Nigeria” by World Finance Magazine seven times. Some other recent awards received by the Bank are “Best Banking Brand Nigeria, 2019” by Global Brands Magazine; “Best Mobile Banking App – Nigeria, 2019” by Global Business Outlook and “Best Financial Inclusion Program – Nigeria, 2019 by International Investor.

In the words of FirstBank’s CEO, Dr Adesola Adeduntan, ‘what all these current ratings and recognitions demonstrate is that FirstBank is strongly back on course! Knowing this is only the beginning of a new era of return to the trailblazing position and that better times lie ahead we encourage our customers and other stakeholders to keep believing and keep standing by us.’

Banking on Robust Customer Service Network

Through the last 128 years of its operations, FirstBank has played a leading role in utilising its robust customer service network and digital banking architecture to support its customers – cutting across diverse cultures, tribes and races beyond the shores of Nigeria – in meeting their individual and business needs.

First Bank of Nigeria Limited operates as a parent company, with the subsidiaries FBNBank in the Democratic Republic of Congo, Ghana, The Gambia, Guinea, Sierra Leone and Senegal; FBN Bank UK Limited in the United Kingdom with a branch in Paris; First Bank Representative Office in Beijing to capture trade-related business between geographies. FirstBank also operates First Pension Custodian Nigeria Limited, Nigeria’s foremost pension custodian. The teeming customers of the First Bank Group are serviced from a network of over 700 business locations across Africa.

Finance

Personal Finance – ABC of Investing – FBNQuest Asset Management …………….. Continued from series 1

Published

2 years ago

September 14, 2024

admin

Ability to Take Risk

This is your financial capacity to take risks. It depends on factors such as your income, savings, financial obligations, and investment time horizon. For example, higher income and substantial savings can increase your ability to take risks, high debt levels or significant financial responsibilities (like supporting a family) can reduce your ability to take risks, the longer your investment time frame, the more risk you can typically afford to take, as you have more time to recover from potential losses.

Balancing Willingness and Ability

Effective financial planning involves balancing your willingness and ability to take risks. Here are a few steps to consider: Assess Your Risk Tolerance, Evaluate Your Financial Situation, Diversify Your Investments and Adjust Over Time. Understanding your willingness and ability to take risks helps you make informed investment decisions that align with your financial goals and comfort level.

Liquidity Needs

This refers to how quickly and easily an asset can be converted into cash without significantly affecting its value. Liquidity need is the requirement to have access to cash or easily convertible assets to meet short-term financial obligations or unexpected expenses. While liquid assets offer safety and flexibility, they typically yield lower returns compared to less liquid investments. Balancing your portfolio to meet both liquidity needs, and long-term growth goals is essential. Understanding your liquidity needs ensures you have the right mix of assets to meet both immediate and future financial goals.

The investment duration

This directly influences the investment objective. In essence, the longer the investment horizon, the greater the potential for risk and reward. However, it’s crucial to align the investment duration with the investment objective to achieve financial goals effectively.

Short-term objectives: Investors typically seek investments that offer liquidity and stability. Examples include money market funds, certificates of deposit (CDs), and short-term government bonds.

Medium-term objectives: These investors often balance growth and income. They may consider a mix of stocks, bonds, and mutual funds.

Long-term objectives: Investors with a long-term horizon can tolerate higher risk for potentially higher returns. They may invest in stocks, real estate, and other growth-oriented assets.

Example: A young investor aiming to accumulate wealth for retirement (long-term objective) might invest in stocks, which historically offer higher returns over the long run while an investor nearing retirement seeking steady income (short-term objective) might prefer bonds and dividend-paying stocks.

Understanding Various Investment Vehicle

An investment vehicle is a financial product or account that allows individuals and institutional investors to invest their money with the aim of generating profit or returns. These vehicles come in various forms, each carrying its own risks and rewards. The best investment vehicle for you will depend on your individual circumstances and financial goals. Consulting with a financial advisor can help you make informed decisions. Here are some of the most popular investment vehicles:

Stocks: A type of investment that gives you partial ownership of a publicly traded company. Such ownership entitles you to any dividends that may be paid, and you may experience gains or losses on your holdings over time. Potential for high returns but higher risk. E.g. shares of FBN holdings.
Bonds: A debt instrument, a bond is essentially a loan that you are giving to a governmental entity or a company in exchange for a pre-set interest rate. Typically, the bond pays periodic interest (coupon payments) during its term, and it matures on a specific date. Steady income but moderate risk.
Mutual Funds: An investment vehicle that allows you to invest your money in a professionally managed portfolio of assets that, depending on the specific fund, could contain a variety of stocks, bonds, or other investments. E.g. FBN Money Market Fund.
Exchange-Traded Funds (ETFs): Like mutual funds but traded on stock exchanges, offering more flexibility and potentially lower costs.
Real Estate: Investing in physical property, such as houses, apartments, or commercial buildings.
Derivatives: Financial contracts based on an underlying asset (e.g., options, futures). This is also a high-risk investment.
Commodities: Physical assets like gold, oil, or agricultural products.

Other consideration when choosing an investment vehicle

Diversification benefit Fees and expenses Reputation of the Financial Advisor

Stay Informed & Continuous learning (A way to take ownership of your finances)

Certainly, improving your financial literacy is a valuable endeavour that can empower you to make informed decisions and better manage your personal finances. Remember, continuous learning is key to improving your financial literacy. Here are some effective ways to enhance your financial knowledge:

Read Books and Magazines Visit Financial Websites
Attend Local Presentations/Webinar Seek Expert Advice

Common Investment Mistakes

Here we highlight the past mistakes people have made while making an investment decision. The aim is to prevent us from doing same and better equip ourselves to make better investment decisions. Investing is a journey, and learning from missteps can lead to better outcomes.

Not setting financial goals Not diversifying
Not learning from your mistakes Not doing your research

In conclusion, monitoring and reassessment are crucial components of successful personal finance management. It is not just enough to execute the actions above; it is important to imbibe the culture of discipline to achieve your financial objectives.

Remember, the journey to financial well-being is a marathon, not a sprint. Stay committed, stay informed, and your future self will thank you.

Finance

The Alternative Bank Debuts with Spectacular Multi-City Launch

Published

3 years ago

October 16, 2023

admin

L-R: Chairman, The Alternative Bank, MUHTAR BAKARE; Executive Chairman Stratevium Nigeria LTD, DR. PRISCA NDU; Head of Product Omnibiz, ZAINAB ARILESERE and CEO, The Alternative Bank:, HASSAN YUSUF during the launch of The Alternative Bank in Lagos recently.

The Alternative Bank, Nigeria’s newest entrant into the financial services sector, launched in spectacular fashion by holding simultaneous launch events in three major cities across the country – Lagos, Abuja, and Kano, making it the first synchronized multi-city brand launch in Nigeria’s history. The Alternative Bank is the ethical banking subsidiary of Sterling Financial Holdings.
Speaking from Lagos, Managing Director of The Alternative Bank, Hassan Yusuf, said, “We believe that banking should be a platform for shared prosperity, where everyone benefits. And this explains why we refer to our customers as partners, because we believe we are on a journey of wealth creation where profits are shared, and customers are provided with funds without incurring interest charges.”
Speaking at the launch event in Abuja, Executive Director of The Alternative Bank, Garba Mohammed, said “The Alternative Bank is here to create wealth-for-all in a sustainable way, by doing things differently and taking a different model to partnering with its customers.”
The launch events featured the presentation of digital products to attendees, designed to bring more people into the formal financial sector with an albeit unconventional approach to e-commerce, investments, assets financing, and renewable energy with solutions such as AltMall for e-commerce, AltInvest for ethical retail investments, AltPower for affordable renewable energy solutions, AltDrive for new and pre-owned vehicle financing, and WasteBanc for the monetization recyclable waste.
In recognition of the unique financial needs of individuals and businesses, The Alternative Bank offers personalized financial consultations, tailored solutions, and one-on-one guidance towards ensuring that customers achieve their financial goals. The zero-interest banking principle is dedicated to fostering sustainable practices, responsible investments and financial decisions that contribute to positive social and environmental impacts.
The Alternative Bank also recently launched an innovation in retail investments with the first AltCoin which affords investors the opportunity to preserve and grow their wealth by investing in gold.
The Alternative Bank started in 2014 as Sterling Alternative Finance, after the Central Bank of Nigeria licensed then Sterling Bank Plc to operate a non-interest banking business and has since grown to become one of the largest ethical banks in Nigeria’s non-interest banking sector.
With the recent completion of Sterling’s transition to a full-fledged financial holdings company, The Alternative Bank will operate as the non-interest banking subsidiary of the Group, while Sterling Bank Limited will continue to provide conventional banking services.

Finance

UBA To Empower KDs, SMEs On Wealth Management

Published

3 years ago

October 12, 2023

admin

Africa’s Global Bank, United Bank for Africa (UBA) Plc, is set to organise another edition of the UBA Business Series. This is in line with the bank’s commitment to support the growth of micro, small, and medium-scale enterprises by equipping them with the requisite tools to strengthen and sustain their businesses.

The UBA Business Series is a regular seminar/workshop organised by the bank as one of its capacity-building initiatives, where leading business leaders and professionals share well-researched insights on relevant topics and best practices for running successful businesses, especially in the face of difficult business challenges.

This edition, which is powered by the UBA Value Chain Banking, will look at the topic ‘Personal Finance: Wealth Management in Today’s Economy’ and is specifically targeted at key distributors and small and medium-sized business owners. It will be held on Thursday, October 12, 2023, from 12 p.m. at the Tony Elumelu Amphitheatre, UBA House, Marina, Lagos, whilst online participants can also access the session on Zoom via https://bit.ly/UBABIZSERIES

See also Jacky Hathiramani: The Brain Behind The Success of Dana Group
The CEO and Executive Editor, of Frontier Africa Reports and eminent television host, Boason Omofaye; Managing Director/CEO, of United Capital Asset Management Plc, Odiri Oginni CFA and Recording Artist and CEO/Founder of Mova Networks, Akitoye ‘Ajebutter22’ Balogun, will be on the ground to give helpful tips on wealth management in today’s economy to business leaders. They will also provide guides on the best ways to take businesses to the next level in challenging economic terrain.

UBA’s Head, SME Banking, Babatunde Ajayi said:

“The vast knowledge and experience of the panellists, will help business owners understand the importance of personal finance, wealth management, and most importantly how to navigate the frailties of the harsh economy to ensure business growth.”

“We know small businesses are the backbone of the economy in every country that is why at UBA, we constantly look for ways of ensuring that these business owners and operators are well-equipped to grow their businesses successfully.”

Recently, UBA announced an initiative aimed at providing robust and comprehensive financing solutions to support and boost the activities of SMEs across the African continent, where SMEs will have the opportunity to access financing in the key sectors of Agro-processing, Pharmaceuticals, Automotive, and Transport and Logistics.

The financing initiative is powered by UBA’s recent partnership with the African Continental Free Trade Area (AfCFTA) secretariat to provide financing for up to $6 billion over the next three years to eligible SMEs across Africa, an agreement which was signed on the sidelines of the 30th Afreximbank Annual Meeting (AAM) which was held in Accra, Ghana earlier in the year.

UBA is a leading pan-African financial institution, offering banking services to more than thirty-seven million customers across 1,000 business offices and customer touch points in 20 African countries.

With a presence in New York, London, Paris, the Cayman Islands, and now the UAE, UBA is connecting people and businesses across Africa through retail, commercial, and corporate banking, innovative cross-border payments and remittances, trade finance, and ancillary banking services.