June 18, (THEWILL) – The significant cut in First Bank’s impairment charges, which translates into a clean loan book in its first quarter Q1 2022 results, signals healthy recovery. It also points to an impressive H1 2022 performance after it successfully brought down its non-performing loan to 6.1 per cent in its FY 2021 performance.
An analysis of the bank’s performance gleaned from the group’s Q1, 2022 results showed that its exposure to bad loans has substantially reduced given the fact that the amount set aside as impairment charges has come down from N13.175 billion in the first quarter of 2021 to N8.75billion in Q1 2022.
In the period under review, First Bank of Nigeria Limited recorded gross earnings of N170.4 billion, up by 33 per cent as against N128.1 billion in the previous year.
The bank’s net interest income was put at N72.9 billion, a 42.1 per cent increase from N51.3 billion generated in the same period of 2021, while non-interest income was N58.8 billion, up by 21.7 per cent from the 2021 figure.
Profit After Tax for the first quarter of 2022 was N31 billion, whereas N16.3 billion was the figure declared for Q1, 2021. The bank declared total assets of N8.8 trillion, a 3.5 per cent rise from N8.5 trillion in the preceding year.
The bank’s customers’ loans and advances (net) totaled N2.999 trillion, up by 5.8 per cent, year-to-date as of December 2021, which was put at N2.835 trillion, while customers’ deposits were N5.9 trillion, as against N5.6 trillion in the first quarter of 2021, a 5.4 per cent increase.
In June 2020, improvements were noted in the bank’s NPL ratio, which stood at 8.8 per cent. By March 2021, this figure had impressively dwindled to 7.9 per cent, and going by the 2021 results, the figure only stood at 6.1 per cent
Non-performing loans, or NPLs, are bank loans that are subject to late repayment or are unlikely to be repaid by the borrower. The inability of borrowers to pay back their loans was aggravated during the financial crisis and the subsequent recessions.
Analysts at Financial Derivatives Company (FDC) in their corporate report had stated, “First Bank delighted investors with a pleasant surprise when it announced stellar results confirming that its turnaround strategy pinned on the pillars of innovation, resilience and digging deep is working.
Commenting on its FY 2021 report, the Chief Executive Officer of FirstBank Group, Dr. Adesola Adeduntan, had said said:
In 2022, our strategic focus is on revenue generation through digital channels and retail product offerings, further driving our synergy potential as well as continuing to improve our operating model to deliver more efficiencies.
“As a result of First Bank’s restructuring exercise, the bank reported a huge sum of N141 billion as loan recovery from previously written off Atlantic Energy Ltd loan in 2021. This exercise bolstered a 100 per cent bottom-line growth in the period under review.”
According to the analysts, this stellar performance is attributable to robust loan portfolio, effective cost structure and increased digital services.
Commenting on the results, Dr. Adesola Adeduntan, Chief Executive Officer of FirstBank Group said:
“Following years of strategic restructuring of the Bank’s balance sheet and operations, the Commercial Banking business is beginning to transition into a sustained growth phase delivering performance commensurate to the size of our business and capabilities of our people.”
In 2021, FBNH operated in a challenging operating environment that was pressured by high inflation and currency devaluation, the effect of which increased operating expenses by 14.2% to N334.2 billion (Dec 2020: N292.5 billion). However, this 14.2% is below the inflation level (Dec 2020: 15.6%) whilst regulatory cost also rose during the period, up 23.2% y-o-y. Despite the inflationary push factors, operating income grew 35.5% to N592.8 billion (Dec 2020: N437.6 billion), resulting in an improvement in cost to income ratio to 56.4% (Dec 2020: 66.8%).
“Going forward, we will sustain our focus towards further improving efficiency by containing cost and increasing revenue,” Adeduntan said.
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