January 05, (THEWILL) – The Managing Director/Chief Executive Officer of First Bank Nigeria Limited, Dr Adesola Adeduntan, has said that the intervention of the Central Bank of Nigeria (CBN) in FirstBank is in the best interest of the bank’s stakeholders and its performance.
He maintains that such involvement by the apex bank, which is largely regulatory, is aimed at restoring confidence in the bank, as well as to reassure the institution’s stakeholders of its commitment towards attaining the required system stability.
Adeduntan, who made these disclosures in an interview with THISDAY newspaper, recalled that his tenure extension in 2021 was part of efforts to ensure the stability of the bank.
He also spoke extensively on the trends that shaped the economy in 2021, his expectations for 2022 and other pertinent issues affecting the financial service sector.
“The central bank’s involvement in FirstBank is essentially about playing the role of the regulator.
“CBN’s intervention has been in the best interest of the bank’s stakeholders and its performance; aimed at restoring confidence in the bank as well as to reassure the depositors, creditors and other stakeholders of the bank of its commitment to ensuring the stability of the financial system.”
Recalling the introduction of the central bank digital currency, the eNaira, as part of the developments that shaped the financial service sector in 2021, the FirstBank boss applauded the CBN for the initiative and said it would impact positively on the bank while driving the financial inclusion strategy.
He said, “The Central Bank of Nigeria (CBN) as the regulator of the banking industry continues to lead and drive development in the industry.
“In the banking industry, digital currency is the future and the CBN is staying ahead of the curve in Africa with the introduction of the eNaira given the several benefits associated with the digital currency, such as safety, speed, and convenience.
“A review of the events over the course of the past few years has shown that digitalisation in its different forms has been net positive for the financial services industry.”
Adeduntan observed that the digitalisation of the naira expands upon Nigeria’s already advanced payment ecosystem, adding that the roadmap for the eNaira over the next couple of months will reveal some exciting use cases that will further grow the ecosystem and encourage even more interaction with this new form of currency.
“Currently we have a whole segment of digitally curious customers who have started interacting with the eNaira, and as the eNaira ecosystem grows and acceptance increases as a store and exchange of value, so will those numbers.
“FirstBank’s channels currently account for about 17 percent of the total reported eNaira transaction volume.
“The bank is dependably dynamic and continues to be at the vanguard of innovation in the banking industry.
“Overall, I am confident that the eNaira will positively impact the bank as our customers continue to transact through the bank’s channels, supporting the digital economy drive. The number of customers will increase as the eNaira will enable the sign-on of excluded people in the financial system, thereby supporting the financial inclusion drive of the CBN.
“The eNaira will reduce the cost of processing cash for the bank, thereby making it a cheaper, reliable and faster way of exchange and the bank will have access to customers across the continents, simplifying and facilitating cross border payments and trade.”
Responding to a question on his expectations and forecast for the economy in 2022, Adeduntan said, “Globally and in Nigeria, economic recovery was strong in 2021 following improved vaccination exercise, and support from monetary and fiscal authorities for demand.
“However, I believe 2022 will witness slower pace in economic growth over lingering health crisis (the fourth wave of the covid-19 pandemic with the omicron variant) and rising price levels globally.
“Also, the boost from base effects and reopening of the economy will decline in 2022. Locally, I expect economic growth to improve slightly; however, the following trends are expected in 2022. a disinflationary trend to continue in 2022 but inflation would still bite harder, although potential PMS subsidy removal is the most consequential known factor that could push inflation to its worst-case estimates in 2022.
“Higher taxes may take the centre stage as the federal government explores all options to cover for burgeoning budget deficits.
“Potential improvement in fiscal metrics given the bullish sentiment in the international oil market and savings potential from the PMS subsidy removal.
“Capital importation may improve as foreign portfolio investments, diaspora remittances and other sources of inflow witness gradual growth following global economic recovery and increased employment for Nigerians in diaspora.
“Monetary policy measures may normalise in 2022 with the Central Bank of Nigeria maintaining an accommodative stand.
“Economic growth in 2022 is projected to be within the range of 2.7 percent and three percent.
“However, the key activities to look out for in 2022 include electioneering, the penultimate year before the next general elections, increase in taxes, buoyant oil market, PMS subsidy removal, and exchange rate policy of the CBN.”
Assessing the bank’s performance through the COVID-19 pandemic, the FirstBank boss said the bank navigated the pandemic crisis successfully and recorded the best performance both on the financial and non-financial fronts.
“The Covid-19 pandemic disrupted several sectors of the economy, the banking industry was one of the most impacted given the critical role that banks play in the economy and across all sectors.
“However, FirstBank navigated the pandemic crisis successfully and recorded the best financial performance since 2015 in the 2020 financial year. FirstBank delivered a strong performance both on the financial and non-financial front underpinned by resiliency, digital innovation and customer centricity.
“On financial performance, despite the pandemic, the bank recorded significant growth in its revenue base, profitability and assets. Revenue and Profitability Performance: In the context of the pandemic, FirstBank Group delivered strong financial results, generating gross revenue of N539 billion for the year ended 31 December 2020.
“The Group’s non-interest income grew impressively by 24 percent between 2019 and 2020, closing at N154.5 billion for the year ending 31 December 2020.
“The non-interest income growth was propelled by transactional and eBusiness income and credit related fees. In 2020, FirstBank Group delivered its most profitable year since 2015.
“The Group’s profit before tax increased from N70.8 billion for the year ended 31 December 2019 to N73.6 billion for the year ended 31 December 2020, resulting in a year-on-year profitability growth of 4 percent between 2019 and 2020.
“Strong Asset Growth and Stable Funding Base: FirstBank Group experienced solid total asset growth of 25.5 percent to N7.4 trillion as at December 31st, 2020 (2019: N5.9 trillion).
“The Group continues to maintain a strong liquidity and capital position driven by its high volume of customer deposits held in low-cost current and savings accounts, which amounted to over 75 percent of the Bank’s customer deposit base as at 31 December 2020.”
He also said, “Renewed emphasis by the Group in improving the service performance level in the retail segment, expanding digital touchpoints and repurposing of its branch network have resulted in 20.5 percent increase in deposits to N4.7 trillion as at December 31st, 2020 (2019: N3.9 trillion); a reflection of our strong franchise value which has come to be associated with safety, stability and innovation.
“Through the bank’s extensive physical footprint and expanding agent banking network and digital banking capabilities, the Group continues to reach an increasing number of customers, which drives customer deposits in low-cost current and savings accounts that serve as an important funding base.
“On non-financial performance, the bank’s non-financial performance across disruptive innovation and customer focus lens has been impressive.
“Some of the milestones achieved during the pandemic was us launching the pioneer FastTrack ATM in Africa offering customers a touchless solution for ATM transactions and enabling customers to pre-order cash on ATMs via the bank’s USSD or mobile banking platforms.
“We unveiled FirstBank’s Virtual Payment Card, a digital representation of the naira-denominated plastic debit card, launched the Firstmonie Agent Credit, a digital lending solution designed to provide bridge finance to help our Agents solve liquidity challenges, leveraged technology to promote digital account opening process through the Digital Sales Executive App, ATMs, Firstmonie Agents, *894# USSD banking, FirstMobile and Company website.
“Also, we upgraded the Bank’s mobile banking application, FirstMobile, with new and improved features to promote a convenient and secured mobile banking experience for customers, rolled out FirstBank Digital Innovation Lab’s proprietary developed Mobile Banking App for our wholly owned subsidiary FBNBank Senegal, Increased customer account base (including wallets) to over 30 million.
Maintained the dominant digital bank rating in Nigeria with over 20 percent market share of electronic banking transaction volumes, about 16 million users on our digital banking platforms (USSD *894#, FirstMobile and FirstOnline) and over 11 million card users.
“Expanded the Agent Banking network to over 86,500[1] agents across 772 out of 774 local governments in Nigeria and paid out over N18 billion as commissions to Firstmonie Agents.Reinforced the Bank’s financial inclusion drive with the disbursement of over N22 billion and N35 billion in loans through FirstAdvance and Agent Credit digital platforms, respectively.”
He said the bank, in partnership with Junior Achievement, positively impacted over one million students through its financial literacy, entrepreneurship and career counselling programs and Improved customer ranking in the Wholesale Banking segment by four places in 2020.
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.
