In order to boost its return on equity (ROE), the parent company of First bank Limited, FBN Holdings Plc, has revealed 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.
In an interview with Reuters, First Bank Limited’s Managing Director/Chief Executive, Mr. Adesola Adeduntan, said the bank plans to boost its return on equity, a key measure of profitability, to between 11 per cent and 14 per cent in 2016 from last year’s “really bad” figure of 3 per cent.
This cut down is part of the bank’s measures to enhance the profitability of the bank. The downsizing which began last year is expected to be a gradual and not an instant process.
Mr. Adeduntan, 46, who became CEO in January after joining First Bank as Chief Financial officer in mid-2014, said the bank which used to have above 8,000 people will be pushed down gradually to 7,000, adding that it does not shy away from taking difficult decisions.
Expressing optimism that the ROE will be much better than last year’s, the bank management is also targeting a cost-to-income ratio of 55 per cent in two years time from 59 percent.
Adeduntan said the bank’s number one priority is to reduce the non-performing loans ratio which stood at 22 per cent at the end of March, compared with 3.8 percent a year earlier.
The bank intends to 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.
FBN Holdings’ Net profit fell to N15 billion ($76 million) from N84 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.