First Bank has started reaping the benefits of its transformation to a modern and information technology-driven bank by consistently growing its performance indices as reflected in its operating results for year ended 2010 and for the first quarter of  2011.

Managing Director/Chief Executive of the bank, Mr. Bisi Onasanya attributed the consistent growth in the performance of the bank to committed execution of the transformation agenda of the bank.

Consistent growth

From N13.3 billion as at end of 2009, profit before tax rose by 144 per cent to N43.2 billion in 2010. In the first quarter of    2011, the profitability rose again by 1.5 per cent to N15.7 billion when compared with the level in March 2010.

Following the same trend, profit after tax  rose from N4.9 billion in 2009 to N33.4 billion in 2010. In the first quarter of 2011, it grew by 1.9 per cent to N12.6 billion from its level in the corresponding quarter in 2010.

In 2010, gross earning and operating income rose by 18.9 per cent and 28 per cent respectively. In the first quarter of 2011 the two indices rose by 1.5 per cent and 34.1 per cent respectively.

While gross earnings rose to N230 billion in 2010 from N193.9 billion in 2009, operating income rose to N177.9 billion from N128 billion. In first quarter 2011, gross earnings rose to N63.3 billion from N62.4 billion in March 2010, while operating income rose to N53.8 billion from N40.1 billion in March 2010.

Also reflecting the consistent growth of the bank, total assets plus contingencies rose by 5.8 per cent to N3.3 trillion in  2010 from N3.1 trillion in 2009. In first quarter of 2011, total assets alone rose 8.9 per cent to N2.5 trillion from N2.3 trillion in the corresponding quarter of 2010.

Growth Drivers

This consistent growth is driven by a transformation of agenda designed to enhance the competiveness of the bank, by leveraging on its expansive retail network, strong brand value proposition and increasing public confidence to consolidate its leadership position and reinforce its aspiration to become the dominant financial services group in sub-Saharan Africa.

Attesting to the impact of the transformation, Onasanya said, “As part of a continued process of competitive repositioning in the evolving landscape, in October 2010, we deployed our new bank operating model, in which we made important changes to our marketing and operations structures.

We changed the orientation of our market-facing units from a geographic to a customer segment focus; consequently, we are now organised around institutional, corporate, retail, public sector and private banking businesses. We also centralised our operations platform from a previously decentralised structure to drive harmonised service delivery and increase our response time across our entire business.

The new operating model has already led to strengthening of relationships across our key customer segments, driving deeper understanding of our customers’ needs and enabling us to develop targeted products and services, which will drive enhanced service delivery, increase our share of the customers’ wallet and drive superior levels of profitability.

Consequently, the bank experienced increased public confidence is reflected in the surge in the bank’s deposit base in the two operating results released recently.

In 2010, the bank attracted additional deposits of N103 billion, thus growing its deposit base, which rose by 7.0 per cent to N1.34 trillion. The growth in deposits persisted in first quarter of 2011, rising to N1.6 trillion.  Most of this growth came from low priced deposits namely: current accounts and savings accounts which constitute 81 per cent of its deposits and thus enhancing its price competiveness.

Also, notwithstanding, the slowdown in lending activities  in the industry, the  bank increased lending, with loans and advances rising by 5.5 per cent in 2010  to N1.2 trillion and by 9.9 per cent in the first quarter of 2011 to N1.3 trillion.

Meanwhile, the bank also strengthened its capitalisation by consistently growing its shareholders’ funds from N311.3 billion in 2009 to N340.6 billion in 2010, indicating 9.4 per cent increase.

In addition to enhancing the performance of the bank, transformation of the bank also impacted favourably on returns to shareholders and on its operational efficiency.

For example, Return on average assets (pre-tax) improved to 1.9 per cent, up from 0.8 per cent in  2009 while  Return on average equity (pre-tax)  also rose to  13.2 per cent, up from 5.5 per cent.

By Babajide Komolafe
Though, net interest margin dropped to 6.3 per cent from 7.1 per cent in 2009 in response to the low interest rate environment, Average cost of funds, however, declined sharply to 3.4 per cent from 6.1 per cent, driven by change in pricing, and mix, of deposits. Also though its liquidity ratio dropped slightly to 50.9 per cent from 58.7 per cent in 2009, it is still far above the 30 per cent required minimum for banks.

Demonstrating increased adequacy of the bank’s capital for its operations, Capital Adequacy ratio improved to 20.35 per cent in 2010, from 15.8 per cent in 2009. The bank also showed improvement in the quality of its loan portfolio as ratio of non-performing loans to total loans fell to 7.7 per cent from 8.2 per cent.