News: Massive Sack Looms as First Bank Announces Plan to Fire 1,000 Workers

First Bank Nigeria Limited has officially announced its plan to cut about 1000 jobs and focus less on providing loans to the oil industry in a bid to reverse the 2015 financial year's 82 per cent slump in profit.

Speaking to Bloomberg in Lagos, Adesola Adeduntan, the chief executive officer of First Bank of Nigeria, has said that one thousand (1,000) staff of the bank will lose their jobs as the bank expects to boost its return on equity (ROE) – a key measure of profitability, to between 11 percent and 14 percent in 2016 from from last year’s 'really bad' figure of three per cent.

Below is how Bloomberg exclusively reported the story;

FBN Holdings Plc, which owns Nigeria’s biggest bank, plans to cut jobs and focus less on providing loans to the oil industry in a bid to reverse last year’s 82 percent slump in profit.

The lender expects to boost its return on equity, a key measure of profitability, to between 11 percent and 14 percent in 2016 from last year’s “really bad” figure of 3 percent, according to Adesola Adeduntan, chief executive officer of FBN’s main First Bank of Nigeria unit. It is also targeting a cost-to-income ratio of 55 percent in two years time from 59 percent, he said.

“ROE will be much better than last year,” Adeduntan said by phone 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.”

Net profit fell to 15 billion naira ($76 million) from 84 billion naira in 2014, as impairments soared and Africa’s biggest economy slowed amid a crash in the price of crude, the biggest source of government revenue and export earnings. Growth decelerated to 2.8 percent in 2015, the lowest level since 1999, and may worsen to 2.3 percent this year, according to the International Monetary Fund.

First Bank’s non-performing loans ratio stood at 22 percent 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 its 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.
Enough Cash

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.”

Source: Tori.ng