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Why We Injected N25bn Into FirstBank, By FBN Holdings GMD

The Group Managing Director of FBN Holdings Plc, Urum Kalu Eke says the recent N25bn capital injection into First Bank of Nigeria, the group commercial banking arm, is part of efforts to consolidate its leadership in the nation’s banking sector.

Speaking further on the capital injection, Chief Financial Officer of FBN Holdings, Wale Ariyibi, said the N25bn injected “is not the total amount received as consideration for selling our 65% holdings (investment) in FBN Insurance.

“The N25bn 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 FBNHoldings’ own funds,” he explained.

With the injection, he continued, FirstBank 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.

Eke, who was addressing the group’s Q2 investors and analysts conference call, said the group delivered a very robust financial performance in the first half of 2020, which demonstrates its resilience and the successful execution of its strategy.

According to him, FBN Holdings not only grew its earnings in the period under review, but strengthened its balance sheet; maintaining a strong liquidity profile; while consolidating its leadership in e-banking. The group, he continued, has also kept costs under control amidst the very challenging operating environment in the sector and the economy as a whole.

“From the financial performance, gross earnings rose 5.8% year-on-year, while profit after tax for the period was up 56.3% 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, FirstBank has made significant progress in agent banking, increasing its agent banking network by over 100% to 59,024 agents within the period, just as it crossed the N5tr threshold in terms of the value of transaction processed. The group processed N5.71tr transactions, compared to N1.61tr in the prior period.

Continuing, the GMD stressed, “more importantly, we are monetising 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.”

Eke added that as promised, non-perfoming loans (NPL) ratio has remained in single digit region, declining further to 8.8% from 9.9% at year end.

Looking ahead, he said: “We remain steadfast and are focussed 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.”

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