Bank targets future generation

After more than a century of relentlessly meeting and satisfying customers’ needs, FirstBank of Nigeria Plc (FirstBank) has continued to adapt and innovate to meet the different challenges and opportunities presented by different generations of customers, competitors and other stakeholders, thus assuring not only its longevity but also sustaining its market leadership.

With over 5 million customers, ten financial subsidiaries, 581 locations in Nigeria, and presence in the UK, France, South Africa and China, the bank is arguably the country’s most diversified full-suite financial services group. The aspiration of its holistic brand transformation exercise initiated in 2006 is to reposition the financial services icon for sustainability and leadership in the next century and beyond.

Established 116 years ago in Nigeria, FirstBank’s increasing globalisation has seen it set up a branch in London in 1982, which became FBN Bank (UK) Limited, Nigeria’s first full-fledged subsidiary bank in the UK. Furthermore, FBN Bank (UK) opened a branch in Paris in 2008, driving FirstBank’s financial services to other parts of Europe. FirstBank also has a presence in South Africa and China, through Representative Offices which are  key drivers of promoting excellent business relationships between South African and Chinese companies.

Led by an auspicious chairman, Oba Otudeko, and GMD/CEO Bisi Onasanya, FirstBank has 1.5 million shareholders. Otudeko, one of Nigeria’s most successful businessmen was appointed Chairman in 2009, having been on the bank’s board for 12 years. He says FirstBank is committed to the development of Nigeria. 

Dr. Otudeko said the new leadership will continuously optimise its people, processes and systems to connect with the younger generation who, undoubtedly, are the market of the future.

“This has become inevitable in view of the fact that half of our population is under 18 years of age. In other words, half of our population of around 150 million will be responsible for key buying decisions until mid-century. If we successfully connect with this critical demographic group, we would have positioned the bank within touching distance of the future of the economy and of the nation,” he said.

Dr Otudeko affirmed that the bank would also ensure that the diverse expectations of customers, shareholders, regulators, and other stakeholders are constantly exceeded to ensure sustained growth for another century. He reiterated the need for operators within the financial services industry to follow FirstBank’s example of exercising prudence in managing the balance sheets and its traditional commitment to a strong ethical operating standard, which has stood it in good stead over the years.

“Now, more than ever in the rich history of our bank, we must not lose sight of this pedigree. Not just because recent industry developments place an enormous premium on a stronger moral backbone amongst the nation‘s bankers, but also because banking is essentially a conservative industry. Therefore, we need to return to the time-tested basics of conservatism and probity,” he said.

The group managing director and CEO of FirstBank, Bisi Onasanya, has a strategic focus for the FirstBank Group: to become a top-5 bank in Africa, and to be the clear leader in sub-Saharan Africa (excluding South Africa), as well as a top-3 ranking for each of its subsidiary businesses. According to Mr. Onasanya, “Our strategy is to initially focus on consolidating in Nigeria towards achieving a clear number one position in profits and assets. Next, we will work towards diversifying the group and drive the bank’s transformation to completion, building scale in key industries such as insurance and investment banking.

In later years, we will then concentrate our efforts on expansion and growth in banking and selective international forays in non-bank financial services in sub-Saharan Africa.”

The bank believes that in all its businesses, economies of scale – in areas such as operations, innovation, branding and risk diversification – are critical success factors. The key elements of FirstBank’s strategy are growth, service excellence, performance management and people. Growth is premised on attaining the full benefits of scale and scope by accelerating growth and diversification of assets, revenue and profits. Both organic and inorganic options are being considered to execute this strategy. Hence, FirstBank would continue to proactively analyze the industry landscape and take any necessary steps towards a synergistic merger or acquisition.

To deliver an exceptional customer experience, FirstBank’s operational excellence strategy is aimed at achieving unparalleled service levels through best-in-class processes, systems and capabilities within an optimal organisational structure. The bank has commenced a number of initiatives, including a holistic branch transformation, channel strategy, process re-engineering, shared services/centralisation, procurement excellence, migration to electronic channels and frontline training. In recognition of the importance that the human capital pool, as a key asset, plays in achieving its goals, the bank has implemented a performance driven strategy designed to make it the premium employer brand and a talent magnet in the Nigerian banking industry.

The bank’s management believes that long-term success will require the creation of a cadre of staff that is “comfortable owning all the bank’s processes from conception to the end.” In attracting the required skill sets from the topmost tier of the pecking order, then it “must continue to build an institution that remains the bank of first choice on the continent.”

 “While we are implementing growth initiatives, we also have open eyes on the opportunities that we can afford to, especially in connection with redemptions of certain banks in place that have value added to our system and fit into our strategy,” said Mr. Onasanya. The bank’s annual statement for 2009 reported a steady, organic revenue growth in its financial highlights, despite the difficult operating conditions experienced globally.

Group financial highlights as at June 30, 2010
The Bank recently released half year results for the period ending June 30, 2010 are as follows:
– Gross Earnings of N122.3 bn, a decrease of 6.7% compared with the equivalent period in 2009 (N131.1 bn June 2009), due to declining lending rates.
– Profit Before Tax of N31.7 bn (N4.3 bn June 2009), an increase of 637.4% on the prior year
– Profit After Tax of N25.3 bn (N3.4 bn June 2009), an increase of 637.4% on the prior year
– Total Assets of N2.3 trn, an increase of 14.6% (N2.0 trn June 2009)
– Deposits & liabilities of N1.4 trn, an increase of 24.1% year on year (N1.1 trn June 2009)
– Loans & Advances[2] of N1.1 trn, a year on year increase of 19.9% (N912.7bn in June 2009)
– Loan loss provision in balance sheet of N35.1 bn (N26.9 bn in June 2009)
– Net loan loss expense of N3.8 bn, includes a credit related write back of N1.1 bn
– Net write back on investments and other assets of N4.7 bn
– Total net write back of N954m
– Shareholders’ Funds of N308bn, an 10.6% decrease on N344bn in June 2009
– Basic Earnings per Share of  77 kobo (12 kobo June 2009)[3]

Risk ratios
– Loan-to-deposit ratio of 79.2% (78% June 2009 and 89.7% as at March 2010
– Improved non-performing loan ratio of 5.75% relative to 6.9% as at March 2010 (4.72% June 2009)
– Capital adequacy ratio of 18% (26.5% June 2009)
– Liquidity ratio of 40.4% (49.2% June 2009)
– Coverage ratio of 53.9% (61.4% June 2009 and 77.2% as at March 2010)
– Cost to income ratio of 74.1% (96.7% June 2009)