Shareholders Furious Over FBN Holdings High NPL Ratio of 22.8%

May 16, 2018
FBN Holdings shareholders

By Modupe Gbadeyanka

The board and management of FBN Holdings Plc have been tasked to make efforts within their reach to recover almost all the Non-Performing Loans (NPLs).

Expressing their frustrations at the firm’s Annual General Meeting (AGM) in Lagos on Tuesday, the shareholders said the bad loans were affecting performance of the company.

They said the N150.4 billion reflected in the group’s 2017 financial statements as payment for impairment charges was too high despite being lower than the N226 billion paid in 2016.

As at December 31, 2017, the NPL of FBN Holdings stood at 22.8 percent, which shareholders said was very high.

But responding to this issue, Group Managing Director of FBN Holdings Plc, Mr Urum Kalu Eke, assured shareholders that something would be done to address the NPLs.

He said the company was also worried about the issue because it had affected its performance in the past.

According to him, the management was taking necessary strategies to recover the bad loans, saying these steps were yielding results as seen in the reduction of the NPL to 22.8 percent in 2017 from 24.4 percent.

“Even though we have not recorded a full resolution of our NPLs, we have made significant progress in dealing with a number of these names and more fundamentally, ensured a strong asset quality from recent credits.

“As a result, NPL for the period declined from 24.4 percent in 2016 to 22.8 percent in 2017,” the bank chief said at the meeting.

On his part, Chairman of FBN Holdings Plc, Mr Oba Otudeko, said the institution made significant progress last year.

According to him, the group’s flagship subsidiary, First Bank Nigeria Limited, sustained its leadership position in the e-payment space, emerging as the first financial institution in Nigeria and West Africa to issue 10 million cards to customers.

He added that the bank was recognised as the first financial institution in Nigeria to achieve an electronic transaction volume of 100 million in a month.

Mr Otudeko said FBN Holdings would consolidate on the progress made in the previous year to deliver a strong and sustainable performance that enhances returns to shareholders.

Also at the Tuesday’s event, the shareholders approved the payment of N8.974 billion dividend proposed by the board. This represents 25 kobo per share for the 2017 financial year.

A look at the firm’s performance last year showed that its gross earnings grew by 2.3 percent to N595.4 billion from N581.8 billion in 2016, while its profit before tax appreciated to N56.3 billion from N22.9 billion.

Furthermore, its customer deposits went up to N3.14 trillion from N3.10 trillion in 2016, while the total assets increased to N5.2 trillion from N4.7 trillion two years ago.

Also, the group posted a net-interest income of N331.5 billion against N304.4 billion in 2016, while the non-interest income dropped by 31.3 percent to N113.7 billion from N165.5 billion a year earlier.

The operating income during the year went down to N444.8 billion from N469.9 billion in 2016, while the operating expenses increased by 7.7 percent to N238 billion from N220.9 billion two years ago.

Last year, its impairment charge for credit losses stood at N150.4 billion in contrast to N226 billion in 2016, while the profit after tax went up by 178.8 percent to N47.8 billion from N17.1 billion in 2016.

As at the close of transactions on the floor of the exchange yesterday, shares of the company were traded at N11.50k per share.

Modupe Gbadeyanka

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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