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First Bank Graduates 12 from Management Development Programme

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By Adedapo Adesanya

First Bank of Nigeria has graduated 12 candidates in its Senior Management Development Programme (SMDP) to enhance their leadership and strategic business skills for sustainable growth in the banking sector.

The bank made this known in a statement released on Friday in Lagos signed by its Group Head, Marketing and Corporate Communications, Mrs Folake Ani-Mumuney, disclosing that the graduation was the third edition since the initiative was conceived in 2017.

SMDP is First Bank’s intensive modular programme for a select group of senior to principal managers who are proven leaders in their respective functions and have been identified as central to the bank’s succession plan.

Mrs Ani-Mumuney said that prior to the 2020 edition of the programme, 40 exemplary staff had successfully participated in the SMDP.

Quoting the bank’s Chief Executive Officer (CEO), Mr Adesola Adeduntan, she said the programme was part of the bank’s efforts to continuously integrate leadership into its culture, growth and expansion drive across Africa.

It was explained that the SMDP programme was a unique learning experience that would impact the professional, intellectual and personal development of the emerging leaders.

“I am delighted with the performance of the third set of the SMDP graduands.

“This set’s performance and response to the various trainings and initiatives have been very impressive and exemplary.

“I encourage each graduand to maximise the experience and knowledge garnered from the programme as they build on their individual and collective contributions to the bank’s continued growth, as well as its efforts in enabling and impacting Nigeria and the African continent at large,” she quoted Mr Adeduntan as saying.

Also, the Senior Vice-Chairman, Standard Chartered Bank Group, Mrs Omobolanle Adesola, said the SMDP programme was an enabler and a call to serve.

Mrs Adesola urged the graduates to uphold integrity and commit to the progress and excellence of FirstBank and the entire banking sector, noting that the COVID-19 pandemic had made the banking terrain challenging.

On his part, Mr Ini Ebong, Chairman, First Academy Governing Council, noted that the graduates had been equipped with skills to actualise their potential and boost their leadership quality.

He said that the bank believed in the graduates and looked forward to seeing them excel in the industry.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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DLM Capital Acquires Microfinance Bank for Expansion

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By Dipo Olowookere

The desire to enhance its growth trajectory in the financial services sector has pushed a leading developmental investment bank, DLM Capital Group, to acquire a microfinance bank in Nigeria.

DLM Capital prides itself as a foremost developmental investment bank in Africa and functions as a sole arranger to more than 80 per cent of structured finance transactions in Nigeria with 100 per cent of all securitisation transactions in the market currently.

But in order to maintain its leadership position in the space, it has acquired Links Microfinance Bank Limited, which has its corporate head office in Yaba, Lagos.

A statement made available to Business Post explained that the deal will give DLM Capital the mandate to operate small scale banking services in Nigeria.

This will also allow the successive launch of its star digital lending brand, Sofri, in the second quarter of this year, it added.

According to the lender, the acquisition, combined with its many fintech efforts already underway, will position them to deliver even more value for corporates and consumers.

“We are particularly excited about our acquisition of Links MFB and how it enhances the growth trajectory of our business.

“This highly strategic acquisition represents another significant milestone for us on our journey as a resilient and well-capitalized financial institution with advanced scale and capacity to deliver sustainable and best-in-class financial services within the Nigerian market.

“We are confident that this decade will be bullish for Nigeria’s tech space and are ready to work with the fintech community in strengthening the solutions necessary to meet consumer needs,” the Corporate Communications Manager at DLM Capital, Chinwendu Ohakpougwu, stated.

It is believed that the acquisition of Links Microfinance Bank by DLM Capital represents both an entry into new businesses and complementary enhancements to the institution’s existing subsidiaries.

First, this prospect opens new market opportunities for the bank on the African continent.

Second, the transaction will enable the institution to exit its ‘legacy bank’ visibility and work more closely with the fintech community to build a ‘challenger bank’ brand that proffers innovative technological solutions for the Nigerian market.

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Banking

Consolidation to Reduce Microfinance Banks in Nigeria by 44%—Agusto

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By Modupe Gbadeyanka

There are strong indications that the number of microfinance banks in Nigeria will reduce by 44.4 per cent by the time the recapitalisation exercise of the sector by the Central Bank of Nigeria (CBN) is concluded in April 2022.

This information was contained in a report on the Microfinance Industry in Nigeria released by a foremost research and credit rating agency in the country, Agusto & Co.

A summary of the report made available to Business Post revealed that the over 900 microfinance banks operating in the country may be pruned to around 500 through consolidation activities as well as failures to meet the new requirements.

The apex regulatory agency in the nation’s bank sector, the CBN, is embarking on a two-phased increase in the minimum capital requirements for all categories of microfinance banks to take effect in April 2021 and April 2022.

As a result of this, the number of operators is expected to reduce and Agusto expects the microfinance industry to fare better in 2021 supported by the global roll-out of COVID-19 vaccines, accelerated digital transformation of microfinance banks and businesses in general, a renewed focus on essential sectors and government support for MSME businesses.

“The industry, however, continues to have a high level of susceptibility to macroeconomic challenges as was witnessed in 2020,” the agency said in its outlook for the year.

In the report, the credit rating agency paid attention to the impact of the COVID-19 pandemic on the sector and non-performing loans (NPLs), an assessment of the new capitalisation requirements for microfinance banks, analysis of the financial performance of microfinance banks and a detailed assessment of the major impediments to growth in the industry.

The pandemic and the technology gaps

Many microfinance banks in Nigeria, like in most developing countries with relatively low penetration of e-channels, witnessed a doubling of obligations that were past due for up to 30 days (PAR 30) during the first wave of the pandemic and lockdown restrictions in early 2020.

Despite up to N5 billion spent by the major national and state microfinance banks in Nigeria on the implementation of internet, mobile and USSD banking services, the industry remains heavily reliant on brick-and-mortar branches for the acquisition of customers and disbursement of loans and the collection of notes and coins for repayment. Given the low technological literacy in the country, collections from Micro, Small and Medium-Scale Enterprises (MSMEs) ground to a halt during the six-week lockdown, even in sectors categorised as essential and in regions not otherwise facing restrictions.

The economic environment also did not lend itself to loan disbursements given the sharp decline in business activities while many microfinance banks were caught off guard by the pandemic with few having the infrastructure in place to lend to MSMEs digitally, the report stated.

Microfinance banks rising NPLs

Agusto said the doubling of non-performing loans witnessed by the Nigerian microfinance industry in 2020 was exceptional in the light of the pandemic, thus many operators had to provide some forbearance and also restructure loans for clients with difficulty repaying as restrictions were gradually lifted.

One of the primary strategies adopted by operators in the sector to drive recoveries in 2020 was to promise customers who met all outstanding obligations access to new loans.

Subsequent to the six-week lockdown, many microfinance banks shifted focus to providers of essential goods and services and also existing customers to drive disbursements. The growth in the industry’s loan book was, however, depressed with the portfolio remaining flat as operators adopted a more cautious approach given the heightened credit risk of MSMEs in key sectors such as education, supply of non-essential goods and services, transportation and hospitality.

Agusto expects to see improvements in the microfinance industry in 2021 as the global and domestic economies rebound and operators adjust to the new realities with a 5 per cent growth in the loan book and a 400-basis point drop in the non-performing loan ratio from an average of 12.6 per cent for major operators.

The pandemic has raised the stakes for payment infrastructure

Microfinance banks in Nigeria have been given a loud wake-up call by the COVID-19 pandemic to accelerate investment in digital channels for loan disbursement and collection.

Many operators have since developed web portals for loan applications and are actively exploring the use of payment services such as Remita, Paystack and ultimately mobile money for collections.

The efficacy of such channels in Nigeria may, however, be limited by the low digital literacy of the unbanked, underbanked and low-income target market of the Microfinance Industry. Having a strong physical presence in various geographical locations remains the major driver of success in the microfinance industry in Nigeria.

The largest microfinance banks have branches spread across the country and are easily identifiable to the target market of low-income earners and MSMEs operating in the surrounding area.

Agusto said it believes the future success of digital channels in the microfinance space (critically for collections and consequently disbursements) will be strongly dependent on the adoption of digital payments by low-income earners and MSMEs in everyday purchase and sales transactions. On the contrary, if the underlying economic activities continue to be executed in notes and coins, then the fundamental challenge of converting collections to a digital transaction would remain.

Notwithstanding, the licensing of three payment service banks (PSB) – Hope PSB Limited, 9 PSB Limited and Moneymaster PSB Limited – may offer a possible solution in the mould of Safaricom’s popular M-Pesa platform in Kenya.

Users of the M-Pesa platform in Kenya and other East African countries are able to pay digitally from and to a mobile telephone number for groceries at a market stall, for public transport or for the services of an artisan, for example. This “mobile money” can be used to settle loan obligations using the same platform, thus facilitating digital collections.

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Cyber Crimes: CBN Fortifies Banking Sector Security Framework

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By Modupe Gbadeyanka

The Central Bank of Nigeria (CBN) has said it was strengthening the security framework of financial institutions to prevent the proliferation of cyber crimes.

The Deputy Governor in charge of Financial Systems Stability at the CBN, Mrs Aishah Ahmad, made this disclosure at a recent webinar themed Cyber threat Landscape: Financial services, 2021 and beyond.

At the event organised by the Information Security Society of Africa, Nigeria (ISSAN), Mrs Ahmad, who was represented by the Director of Information Technology (IT) at CBN, Mrs Rakiya Mohammed, stated that the conversation around cyber threat could not be more important than now.

“The financial sector is particularly susceptible to cybercrime, given its crucial roles in financial intermediation in a highly connected financial system.

“CBN is committed to strengthening its regulatory and supervisory framework for cyber risk and vulnerability testing for the banking sector,” she said.

Also speaking at the event, a US-based cybersecurity expert, Dr Austen Ohwobote, advised that as the pace of digital disruption accelerates and innovative new technology reach the market, organisations should put measures in place to check cyber-crimes.

He listed the different cyber-attacks such as web-based attack, third party attack, insider threats attacks, and advised organisations to put resilient structures in place in order to understand the nature of attacks and when attacks are about to happen.

Mr Ohwobote submitted that for financial institutions to adequately check cyber-crimes, they must adapt and implement cybersecurity as a guide, recognise cybersecurity as a big issue, appoint cybersecurity ambassadors, raise customer awareness, emphasize strong password and Multi-Factor Authorization (MFA), adding that cybersecurity expert should be a member of decision making and re-emphasize third-party vendor management.

In his presentation, the Managing Director of Ecobank Nigeria, Mr Patrick Akinwuntan, noted that Artificial Intelligence (AI) can be deployed to predict security threats and proffer solutions.

He described AI as a game-changer, stressing that the manual and semi-automated techniques of monitoring and responding to systems issues of the past were grossly inadequate to take care of the risk of the future.

“Technology has evolved and has changed the way we operate. COVID-19 only further accelerated the adoption of technology. Artificial intelligence, automation, internet have all created opportunities for business to unlock more values, but cyber threats have also increased both in complexity and volume,” Mr Akinwuntan said.

He added that, “The new normal of working from home has further exposed institutions to cyber-attacks and data breaches. Endpoints for remote access must be secured or else institutions are exposed to attack by a mismanaged endpoint. There is also the aspect of insider threat and exposure of password.”

Further, the banking executive identified other threats faced by financial institutions and organisations across the world to include cloud security threats and supply chain attack, stressing that a breach on one vendor could have ripple effects on the organizations.

In his submission, the president of ISSAN, Mr David Isiavwe, called on financial service providers and other organisations that handle large data of customers, to consider putting the right measures in place in order to safeguard their operations. He stated that the advocacy group will continue to create cybersecurity awareness and data handling.

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Wigwe Lauds Effectiveness of Access Bank 5-Year Strategy

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By Dipo Olowookere

The group managing director of Access Bank Plc, Mr Herbert Wigwe, has disclosed that the 5-year business strategy deployed by the management has continued to show effectiveness.

Mr Wigwe said this in reaction to the strong performance of the financial institution last year despite a challenging economic and regulatory landscape caused by the COVID-19 pandemic.

Access Bank 2020 performance

In the year, the lender improved its gross earnings by 15 per cent to N764.7 billion from N666.8 billion achieved in the comparative period of 2019.

This was driven by significant improvement in the retail banking arm of the business.

In 2019, the financial institution merged with the defunct Diamond Bank, one of the leaders in the retail end. The transaction was entered into to make Access Bank one of the forces to reckon with in the segment and last year, the dividend of this deal was visible for the blind to see.

Business Post reports that the retail arm of the business recorded revenue of N177.2 billion in 2020, 64.4 per cent higher than the N107.8 billion achieved in the 2019 fiscal year.

This was buoyed by a 5.8 million growth in customer sign-on during the year, especially through the bank’s financial inclusion efforts.

As a result, the bank’s customer deposits grew by 31 per cent to N5.6 trillion with savings account deposits standing at N1.3 trillion.

Similarly, net loans and advances grew by 18 per cent to N3.6 trillion in comparison to its FY 2019 figures of N3.1 trillion.

At the close of business on December 31, 2020, Access Bank had a profit before tax of N125.9 billion, higher than N111.9 billion in 2019, while the profit after tax closed at N106.0 billion versus N94.1 billion a year earlier.

Dividend payout increased

To reward its shareholders, Access Bank Plc increased its final dividend payout for the year 2020 by 37.5 per cent or 15 kobo to 55 kobo from 40 kobo.

In the financial statements for the year ended December 31, 2020, the lender said it intends to pay a final dividend of 55 kobo on Friday, April 30, 2021, to shareholders whose names appear on the register of members as at the close of business on Thursday, April 15, 2021.

CEO speaks

Access Bank’s resilient performance “is testament to the effectiveness of our strategy and capacity to generate sustainable revenue,” Mr Wigwe was quoted as saying in a statement made available to Business Post.

According to him, “The strategic actions that the bank has taken over the past 12 months evidence a strong focus on retail banking and financial inclusion, an African expansion strategy and a drive for scale for sustainable value creation.”

The respected banker noted that, “In 2020, Access Bank proudly opened its doors for business in Kenya and Mozambique, further increasing our footprints across the African Continent.”

“Access Bank Zambia also concluded the acquisition of Cavmont Bank Limited in January 2021 and the group recently announced the approval by relevant regulatory authorities for the acquisition of Grobank Limited, creating an inroad into the South African market in the realization of the group’s strategic ambitions,” he added.

Mr Wigwe stated that, “In view of the opportunities that exist in the market, we will be transitioning to a HoldCo structure.”

Already, an approval-in-principle has been received by Access Bank from the Central Bank of Nigeria (CBN) for the restructuring and the new entity will consist of four subsidiaries in order to tap into the market opportunities that are available in the consumer lending market, electronic payments industry and retail insurance market.

“Going into the fourth year of our 5-year cyclical strategy, our focus remains on consolidating our retail momentum and expanding our African footprint in a sustainable manner,” Mr Wigwe said.

As the bank intensified its recovery efforts, it undertook significant write-off and leveraged its robust risk management practices. As a result, its asset quality improved to 4.3 per cent compared to its 2019 report of 5.8 per cent and this is expected to continue to trend downwards as it strives to surpass the standard it had built in the industry prior to the merger with Diamond Bank.

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FCMB Records 73,385 Excess Charges, Dispense Error Complaints

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By Dipo Olowookere

In 2020, one of the mid-level financial institutions in Nigeria, First City Monument Bank (FCMB), witnessed a surge in the number of complaints it received from its customers.

The analysis of a document released by the lender by Business Post showed that some of the outstanding complaints were from failed bill payments, dispensing errors on other bank terminals, excess charges, amongst others.

Last year, many organisations, including banks, were forced to operate remotely and this made many residents of the country to carry out financial transactions with the use of technology, especially mobile phones.

The use of phones to complete transactions meant that customers would be charged, while the Automated Teller Machines (ATMs) became more active because banks limited their operations at the banking halls.

It was not a surprise that banks, including FCMB, witnessed such an increase in the period under review.

In the 2019 accounting year, the number of complaints FCMB received from its customers stood at 33,705, indicating an increase by 39,680 or 117.7 per cent.

However, a critical look at the document showed that FCMB put in place an effective and responsive complaints management process.

With 1,473 unresolved complaints from the previous year added to the year under consideration, which brought the total at 74,858, the lender resolved 72,984, with seven of the unresolved in the year escalated to the Central Bank of Nigeria (CBN) for intervention, while 1,867 complaints were pending as at December 31, 2020.

Business Post observed that the value of the complaints received last year by FCMB stood at N1.6 billion, lower than N6.6 billion in 2019, while the amount refunded was N25.6 million, lower than N40.7 million in the preceding year.

Meanwhile, the management of FCMB has advised customers with complaints to lodge them with the Complaints Officer at complaints@fcmb.com for necessary action.

In the year under review, FCMB said its gross earnings increased to N199.4 billion from N181.3 billion and the various cost-effective strategies put in place by the team ensured that the profit before tax grows to N21.9 billion from N20.1 billion in 2019, while the net profit stood at N19.6 billion compared with the previous year’s N17.3 billion.

This enabled the board to increase the dividend payout for the 2020 financial year to 15 kobo in contrast to the 14 kobo paid in the preceding year.

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Stanbic IBTC Begins SMS Banking for Customers’ Convenience

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By Dipo Olowookere

The desire to bring more convenience to its customers has made Stanbic IBTC Bank Plc to introduce a unique SMS banking solution with a bundle of functionalities.

The SMS Banking Solution allows customers to initiate transactional and non-transactional banking activities by sending a short message from their registered phone number to a custom number, 30909.

A statement from the lender, which is a subsidiary of Stanbic IBTC Holdings PLC, disclosed that through its 3S (SMS/Self Service), users can carry out funds transfer and bill payments.

The chief executive of Stanbic IBTC Bank, Mr Wole Adeniyi, explained that the 3S Banking Solution is one of the organisation’s offerings aimed at infusing digital banking to deliver solutions to customers’ banking needs.

According to him customers with feature phones and those with limited access to the internet can seamlessly initiate secure transaction requests or other general service requests to the bank.

“Stanbic IBTC leverages on communication protocols and services available on a mobile device such as SMS to bring more convenience to its customers.

The 3S Banking Solution possesses funds transfer and bill payment capabilities. It is simple to use and can be adopted by all our customers,” he said.

“Stanbic IBTC remains committed to the delivery of innovative solutions to enhance customer experience and increase financial inclusion in the country,” he added.

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