If there is one thing that is causing anxiety at First Bank at the moment, it is the report that the financial institution is planning to lay off about 1000 workers on its payroll.
Also, if the feelers we are getting is anything to go by, the situation may be causing problem within the bank because some of the staffers do not know if the bank would still need their services.
Vanguard claimed a source within the bank explained that the Bank is not planning to “sack 1000 staff at a go. It was part of the measures taken last year to enhance the profitability of the bank. So the pruning will be gradual and it started last year.”
It was stated that First Bank’s non-performing loans ratio stood at 22 per cent at the end of March, compared with 3.8 percent a year earlier. Reducing that figure is the “number one priority,” said
Adeduntan. The bank will do that by reducing the proportion of it’s lending to the oil and gas sector, currently at about 39 percent of total loans, and focusing more on blue-chip companies in other industries, he said.
Adeduntan ruled out any equity raising this year, saying the bank’s capital adequacy ratio of 17.2 percent was enough of a buffer and above the central bank’s minimum requirement of 15 percent. It would still be adequate if the floor is raised to 16 percent 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,” said Adeduntan, 46, who became CEO in January after joining First Bank as Chief Financial officer in mid-2014. “We generate enough internal capital,” he said.
FBN’s shares rose 5.3 percent to 3.57 naira on Wednesday. They’re still down 30 percent this year, more than the Nigerian Stock Exchange All Share Index’s drop of 13 percent.
The bank’s valuation lags that of its main competitors such as Guaranty Trust Bank Plc and Zenith Bank Plc. Its stock trades at 0.22 times book value, or the theoretical price that shareholders would get if all assets were sold and liabilities paid-off.
That compares with 1.18 times for GTBank and 0.62 for Zenith.
“The market has over-corrected,” Adeduntan said.
“It’s priced in all the negative information. For us, it can only go up.”
