October 15, (THEWILL) – In a dynamic twist of events, First Bank of Nigeria (FBN) Limited received the highest investment inflow into the economy in Q2 2023 with $323.13 million. This represents 18.23 percent of $1.03 billion total capital importation for the period.
By this historic performance, the 128-year-old financial services behemoth has displaced the league of top players in capital importation over the years. These include Citibank Nigeria Limited, Standard Chartered Bank and Stanbic IBTC Plc in that order.
In the latest report by the National Bureau of Statistics (NBS) a week ago, FBN Limited, which had not featured among the major players, pushed Citibank with its US$187.77 million (12.23 percent of total value) to the second position. While relatively obscure Rand Merchant Bank Limited with US$126.03 (6.47 percent) came third.
On a major surprise note, Standard Chartered Bank, a known top player, shared the bottom place with Wema Bank Plc – posting $1.33 million and $1.08 million respectively – among the mainstream deposit money banks.
When contacted for comment on FBN’s historic performance in Q2 2023 capital importation, Global Head, Marketing and Corporate Communications at FBNHoldings, Mrs Folake Ani-Mumuney, did not respond. Text, WhatsApp messages and calls to her mobile telephone were not answered.
However, an investment expert, Dr Paul Uzum, attributed the development to possible increase in remittances made through the bank. Uzum, a top stockbroker and head of securities trading at Planet Capital, said given FBN’s relatively smaller balance sheet than the likes of Zenith, Access, GTCo and UBA, increased customer patronage in remittances must have given FBN an edge over its peers. .
The parent institution, FBN Holdings, recorded impressive performance in the first six months of the year ended June 30, 2023, according to its interim financial statements filed with the Nigerian Exchange (NGX) Limited.
The group’s profit after tax rose to N187.17 billion from N56.53 billion year-on-year, representing a 232 percent increase – amid a challenging operating environment. During the period, the foremost financial services establishment also recorded a significant increase in interest income which jumped by 70 percent to N383.28 billion against N226.35 billion in the 2022 half year.
Like its peers, it harvested bountifully from the forex reclassification windfall of the second quarter which earned it a N301 billion in forex gains against a loss of N2 billion suffered in H1 2022. The cashless policy revenue boom of the period pushed the group’s electronic banking fees to N34 billion compared with N25.53 billion in the equivalent period of last year – a revenue boost of 36 percent.
Also, during the period, the balance sheet expanded by 33.57 percent to N12.79 trillion from N9.58 trillion as of December 31, 2022, suggesting a possible 66 percent growth by year-end.
FBNH grew its loan book to N5.26 trillion against N3.78 trillion as of December 31, 2022 – a rise of 39.1 percent, while customer deposits also followed the growth trajectory – rising to N9.04 trillion from N7.12 trillion representing a 27 percent jump.
The stock has remained investors’ toast. FBNH closed its last trading day (Friday, October 13, 2023) at N16.10 per share on the Nigerian Exchange (NGX), recording a 0.6% drop from its previous closing price of N16.20. FBN began the year with a share price of N10.90 and has since gained 47.7% on that price valuation, ranking it 57th on the NGX in terms of year-to-date performance.
FBN Holdings is the seventh most traded stock on the Nigerian Stock Exchange over the past three months (Jul 17 – Oct 13, 2023). The stock has traded a total volume of 1.38 billion shares—in 13,907 deals—valued at N26.5 billion over the period, with an average of 22 million traded shares per session.
A volume high of 347 million was achieved on July 24th, and a low of 1.38 million on October 13th, for the same period.
The group’s impressive performance in its 2023 H1 operations, including the historic capital importation record, was a plus to the establishment which is currently embroiled in a legal battle with its major stakeholder, Oba Otudeko over certain decisions of the board.
Notwithstanding the impact of the legal tussle on the corporate image, the Doyen of Nigerian Stockbrokers, Sam, Ndata believes that good management and impressive performance of the bank triggered the unseen forces of demand and supply to manifest in the dramatic change in favour of First Bank. This is at the backdrop of steep decline in capital importation into the economy which fell by 32.9 percent in one year – from $1.53 billion in Q2 2022 to $1.03 billion in the reference period.
An investment banker, Kayode Komolafe, explained that Citibank and Standard Chartered Bank attract more capital because they are outposts and subsidiaries of major international financial establishments. They are not widespread in Nigeria.
“The banks that attract the highest foreign investment are subsidiaries of major international financial services institutions who have the money. They are able to build huge capital within their base where rates are significantly low to invest offshore with prospects of favourable returns”, Komolafe said. He added that the foreign investors have more confidence in the subsidiaries of their own banks than in the Nigerian wholly-owned financial services institutions. .
According to Komolafe, the decline in investment inflow through the foreign banks reflects the unhealthy economy and challenging operating environment. Officials of the Nigerian government have engaged in aggressive globe-trotting for foreign investment amid domestic crises that have prompted the divestment of major companies and relocating outside Nigeria.
Indeed, some consumer goods firms have opted to exit the Nigerian Exchange (NGX) and close shop in Nigeria. These include GlaxoSmithKline (GSK) Plc and PZ Cusson Plc with combined market capitalisation of N143 billion which will be wiped from the NGX equities capitalisation following the firms’ delisting from the stock market.
GSK, had in August, 2023 announced plans to cease operations in Nigeria without stating reasons for its decision. Economy experts have, however, link the company’s divestment decision to scarcity of forex and the huge losses incurred by most companies following the devaluation of the naira.
A study by this newspaper showed that 10 consumer goods firms recorded a total of N517 billion in forex revaluation losses during the first half of the year. Nestle Nigeria and Dangote Cement suffered the most with N123.7 billion and N113.66 billion forex losses respectively.
“The companies have limitations in sourcing local raw materials, they have challenges sourcing forex for import, they cannot repatriate their assets due to dollar shortage, and they have to pay taxes, employee remunerations and other commitments. Is that not walking the shadow of the valley of death?” queried Marcel Okeke, an Economist and Sustainability expert.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
