Economy
FBN Holdings to Improve Operating Model for More Efficiencies
By Dipo Olowookere
The management of FBN Holdings Plc says its strategic focus in 2022 is revenue generation through digital channels and retail product offerings.
Reacting to the performance of the company in the 2021 financial year, the team stated that efforts would be made to further drive “our synergy potential as well as continue to improve our operating model to deliver more efficiencies.”
Last year, the organisation grew its gross revenue by 28.2 per cent to N757.3 billion, with profit before tax up by 99.1 per cent to N166.7 billion and the loans and advances growing by 30.0 per cent to N2.9 trillion.
In addition, the total assets appreciated by 16.2 per cent to N8.9 trillion, reaffirming its commitment to driving revenue and profitability as it completes the balance sheet clean-up.
A thorough analysis showed that the interest income remained challenged given the moderated interest rate environment negatively impacting yields; as a result, interest income declined 4.1 per cent to N369.0 billion from N384.8 billion in 2022.
To mitigate the effect of the low-interest rate on investment securities and revenue generation, the firm remained deliberate with its intensified deposit mobilization and funding strategy to support enhanced loan growth at optimised rates leading to a 5.7 per cent increase in interest expense to N140.8 billion from N133.2 billion a year earlier.
Conversely, non-interest revenue grew by 96.1 per cent to N364.6 billion from N185.9 billion on the back of increased fees and commission income, treasury activities and other operating income.
Additionally, and in line with its focus on further enhancing revenue generation capacity, First Pension Custodian Limited, a subsidiary of FBN Holdings’ flagship subsidiary, First Bank of Nigeria Limited, entered into a definitive agreement with Access Bank Plc for the planned acquisition of the entire share capital of Access Pension Fund Custodian Limited held by Access Bank Plc.
The idea behind this move is to boost its market share in the industry, aid revenue diversification and support annuity income as FBN Holdings plan to create quality loans with a focus on retail lending driven by technology as we continue to grow non-interest income to further diversify revenue.
In 2021, the company operated in a challenging operating environment that was pressured by high inflation and currency devaluation, the effect of which increased operating expenses by 14.2 per cent to N334.2 billion from N292.5 billion).
However, this 14.2 per cent is below the inflation level of 15.6 per cent in the previous year whilst regulatory costs also rose during the period, up 23.2 per cent y-o-y.
Despite the inflationary push factors, operating income grew 35.5 per cent to N592.8 billion from N437.6 billion, resulting in an improvement in cost to income ratio to 56.4 per cent from 66.8 per cent.
It was observed that in the year, deposits from customers increased by 19.5 per cent y-o-y to N5.9 trillion from N4.9 trillion, reaffirming its strong market access and robust funding base.
In the year, total assets grew by 16.2 per cent y-o-y to N8.9 trillion from N7.7 trillion driven by a 30.0 per cent y-o-y increase in customer loans and 26.3 per cent increase y-o-y in investment securities. Cash and balances with central banks, loans to banks & customers and investment securities constituted 87.2 per cent of total assets compared with 83.4 per cent of the preceding year.
The firm, while reacting to the figures, stated that, “As a financial service holding company, driving synergies remains a critical part of our strategy and has been integrated into every aspect of our delivery model.
“We pride ourselves in the uniqueness of our diversified portfolio and the collaborative ecosystem that we have built around our lines of business, our customers, and the unique value proposition that we deliver.
“We are also increasingly leveraging technology – artificial intelligence, robotics, and other next-generation technological advancements, to deepen collaboration and further drive operational efficiency across the group.”
“Following years of strategic restructuring of the Bank’s balance sheet and operations, the commercial banking business is beginning to transition into a sustained growth phase delivering performance commensurate to the size of our business and capabilities of our people. Profit before tax is up 77.9 per cent, gross earnings 30.3 per cent, total assets 15.9 per cent and customer deposits up 19.5 per cent.
“We continue to record progress in Asset Quality and Risk Management stemming from our retooled and strengthened risk management architecture.
“On the back of this, non-performing loan ratio further declined to 6.1 per cent from 7.7 per cent while coverage ratio improved to 62.2 per cent from 48.0 per cent.
“With a cleaner balance sheet and resilient earnings-generating capacity, First Bank (Nigeria) was able to accrete capital buffers from organic earnings. Hence, despite the increase in loans and advances, Capital Adequacy Ratio (CAR) remained steady, marginally increasing to 17.4 per cent versus 17.0 per cent in 2020,” it added.
By Adedapo Adesanya
President Bola Tinubu on Friday presented a budget proposal of N58.47 trillion for the 2026 fiscal year titled Budget of Consolidation, Renewed Resilience and Shared Prosperity to a joint session of the National Assembly, with capital recurrent (non‑debt) expenditure standing at 15.25 trillion, and the capital expenditure at N26.08 trillion, while the crude oil benchmark was pegged at $64.85 per barrel.
Business Post reports that the Brent crude grade currently trades around $60 per barrel. It is also expected to trade at that level or lower next year over worries about oil glut.
At the budget presentation today, Mr Tinubu said the expected total revenue for the year is N34.33 trillion, and the proposal is anchored on a crude oil production of 1.84 million barrels per day, and an exchange rate of N1,400 to the US Dollar.
In terms of sectoral allocation, defence and security took the lion’s share with N5.41 trillion, followed by infrastructure at N3.56 trillion, education received N3.52 trillion, while health received N2.48 trillion.
Addressing the lawmakers, the President described the budget proposal as not “just accounting lines”.
“They are a statement of national priorities,” the president told the gathering. “We remain firmly committed to fiscal sustainability, debt transparency, and value‑for‑money spending.”
The presentation came at a time of heightened insecurity in parts of the country, with mass abductions and other crimes making headlines.
Outlining his government’s plan to address the challenge, President Tinubu reminded the gathering that security “remains the foundation of development”.
He said some of the measures in place to tame insecurity include the modernisation of the Armed Forces, intelligence‑driven policing and joint operations, border security, and technology‑enabled surveillance and community‑based peacebuilding and conflict prevention.
“We will invest in security with clear accountability for outcomes—because security spending must deliver security results,” the president said.
“To secure our country, our priority will remain on increasing the fighting capability of our armed forces and other security agencies by boosting personnel and procuring cutting-edge platforms and other hardware,” he added.
By Aduragbemi Omiyale
The deadline for the recapitalisation of the Nigerian pension industry has been extended by six months to June 2027 from December 2026.
This extension was approved by the National Pension Commission (PenCom), the agency, which regulates the sector in the country.
Addressing newsmen on Thursday in Lagos, the Director-General of PenCom, Ms Omolola Oloworaran, explained that the shift in deadline was to give operators more time to boost the capital base, dismissing speculations that the exercise had been suspended.
“The recapitalisation has not been suspended. We have communicated the requirements to the Pension Fund Administrators (PFAs), and we expect every operator to be compliant by June 2027. Anyone who is not compliant by then will lose their licence,” Ms Oloworaran told journalists.
She added that, “From a regulatory standpoint, our major challenge is ensuring compliance. We are working with ICPC, labour and the TUC to ensure employers remit pension contributions for their employees.”
The DG noted that engagements with industry operators indicated broad acceptance of the policy, with many PFAs already taking steps to raise additional capital or explore mergers and acquisitions.
“You may see some mergers and acquisitions in the industry, but what is clear is that the recapitalisation exercise is on track and the industry agrees with us,” she stated.
PenCom wants the PFAs to increase their capital base and has created three categories, with the first consists operators with Assets Under Management of N500 billion and above. They are expected to have a minimum capital of N20 billion and one per cent of AUM above N500 billion.
The second category has PFAs with AUM below N500 billion, which must have at least N20 billion as capital base.
The last segment comprises special-purpose PFAs such as NPF Pensions Limited, whose minimum capital was pegged at N30 billion, and the Nigerian University Pension Management Company Limited, whose minimum capital was fixed at N20 billion.
By Adedapo Adesanya
Three securities weakened the NASD Over-the-Counter (OTC) Securities Exchange by 0.68 per cent on Thursday, December 18.
According to data, Central Securities Clearing System (CSCS) Plc led the losers’ group after it slipped by N2.87 to N36.78 per share from N39.65 per share, Golden Capital Plc depreciated by 77 Kobo to end at N6.98 per unit versus the previous day’s N7.77 per unit, and FrieslandCampina Wamco Nigeria Plc dropped 19 Kobo to sell at N60.00 per share versus Wednesday’s closing price of N60.19 per share.
At the close of business, the market capitalisation lost N16.81 billion to finish at N2.147 billion compared with the preceding session’s N2.164 trillion, and the NASD Unlisted Security Index (NSI) declined by 24.76 points to 3,589.88 points from 3,614.64 points.
Yesterday, the volume of securities bought and sold increased by 49.3 per cent to 30.5 million units from 20.4 million units, the value of securities surged by 211.8 per cent to N225.1 million from N72.2 million, and the number of deals jumped by 33.3 per cent to 28 deals from 21 deals.
Infrastructure Credit Guarantee Company (InfraCredit) Plc remained the most traded stock by value with a year-to-date sale of 5.8 billion units valued at N16.4 billion, followed by Okitipupa Plc with 178.9 million units transacted for N9.5 billion, and MRS Oil Plc with 36.1 million units worth N4.9 billion.
Similarly, InfraCredit Plc ended as the most traded stock by volume on a year-to-date basis with 5.8 billion units traded for N16.4 billion, trailed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.7 million, and Impresit Bakolori Plc with 536.9 million units exchanged for N524.9 million.
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