The need to deliver greater value to shareholders has been described by the Group Managing Director FBN Holdings Plc, Mr. Urum Eke as reason for the injection of N25 billion capital into the group commercial banking arm, First Bank Plc.
Group Managing Director, FBN Holdings, Urum Eke
Mr. Eke who was speaking at the Q2 investor and analyst conference call recently described the move as one in line with the Group’s mandate of strengthening the resolve of the FBN Group to consolidate its leadership in the banking sector.
Giving further insight into the capital injection, the Chief Financial Officer of FBN Holdings, Wale Ariyibi, said the move comes as equity capital clearing all regulatory approvals.
‘’However, this is not the total amount received as consideration for selling our 65 per cent holdings (investment) in FBN Insurance. The N25 billion is made up of two parts: net proceeds of sale of stake in FBNI, which is gross proceeds less professional fees, charges and other cost of sale and FBN Holdings’ own funds.”
According to him, with the injection, First Bank leveraged this Tier 1 Capital with its existing Tier 2 capital to increase its Capital Adequacy Ratio from 15.3 per cent as at Q1 2020 to 16.53 per cent as at Q2 2020.
Meanwhile, speaking further on the Q2 financial performance of FBN Holdings Plc, Eke said the Group delivered a very robust financial performance which demonstrates the resilience of the Group and the successful execution of its strategy.
According to him, they have delivered earnings growth, strengthened their balance sheet; maintained a strong liquidity profile; consolidated their leadership in e-banking whilst also keeping their costs under control amidst the a very challenging period for the sector and the economy as a whole.
“From the financial performance, gross earnings was up 5.8 per cent year-on-year, profit after tax for the period was up 56.3 per cent on the back of strong growth in non-interest income. The progress made in our non-interest income was driven by good treasury management activities benefiting from the increased volatility as well as increasing market share in the e-banking segment,” he said.
According to him, First Bank has made significant progress in agent banking, increasing its agent banking network by over 100 per cent to 59,024 agents within the period.
Similarly, it crossed the N5 trillion threshold for value of transaction processed, as we processed 5.71trillion compared to N1.61trillion in the prior period. More importantly, we are monetizing our agent banking and its revenue contribution to e-business income continues to grow.
The growth in volume and value across our electronic banking channel continues to offset the reduction in regulated fees and this has allowed us to keep our revenues flat,” he said.
Eke added that as promised, non-performing loans(NPL) ratio has remained in single digit and continues to decline, saying the NPL ratio dropped further to 8.8 per cent from 9.9 per cent at year end.
“We remain steadfast and are focused on the controllable elements with a mission to propel our performance over the coming periods. In particular, we will continue to innovate and maintain our distinctive advantage in digital and agent banking and continue our transformation in transaction-led banking activities. As recent events have shown, we have managed to weather the storm and are focused on delivering greater value to our stakeholders.”