First Bank to Downsize 1,000 Workers in Bid to Reverse Slump in Profit

 In a bid to reverse the 82% slump in FBN Holdings Plc profit in 2015, , the parent company of First Bank Nigeria Limited, is planning to retrench about 1000 employees and focus less on providing loans to the oil industry.

According to Bloomberg, First Bank Nigeria, the main subsidiary of FBN Holdings, who made major strides with the appointment of its first female chairman of the board, Mrs Ibukun Awosika in 2015 is expecting to boost its return on equity to between 11% and 14% in 2016; a huge departure from last year’s “really bad” 3%, and also targeting a cost-to-income ratio of 55% in two years time from 59%. said Mr. Adesola Adeduntan, the bank’s Chief Executive Officer.

“ROE will be much better than last year,” Adeduntan said in a telephone interview from Lagos on Wednesday.

“At a minimum, we should triple it. We do not shy away from taking difficult decisions. We used to have above 8,000 people. We’ll push it down, gradually to 7,000,” he added.

The crash in crude oil prices, which is the biggest source of export earnings and Federal Government revenue adversely affected the Nigerian economy and led to a fall in First Bank’s net profit which fell to N15bn ($76m) from N84bn in 2014. Growth decelerated to its lowest since 1999, a meagre 2.8% in 2015 and is likely to worsen to 2.3% this year according to the International Monetary Fund.

Adeduntan ruled out any equity raising this year, saying the bank’s capital adequacy ratio of 17.2 per cent was enough of a buffer and above the Central Bank of Nigeria’s minimum requirement of 15 per cent. It would still be adequate if the floor is raised to 16 per cent in July for Systemically Important Institutions, including First Bank.

“We continuously evaluate it and the position now is that there’s no need for external capital,” Adeduntan, 46, who became the CEO in January after joining First Bank as chief financial officer in mid-2014, said.

“We generate enough internal capital,” he said. FBN’s shares rose by 5.3 per cent to N3.57 on Wednesday. They are, however, still down 30 per cent this year, more than the Nigerian Stock Exchange All Share Index’s drop of 13 per cent.

Adeduntan is confident that the measures put in place will achieve the aim of improving the figures in from here on out and sounding optimistic, he said “The market has over-corrected. “It’s priced in all the negative information. For us, it can only go up.”

Source: Punch