A Review of the Nigerian Energy Industry

‘Falling oil prices will not affect FBN’s non-performing loans’

17 December 2014, Lagos – The Head of Finance, FBN Holdings Plc, Mr.OyewaleAriyibi, has said the decline in crude oil price will not lead to an increase in the non-performing loans of First Bank of Nigeria. It is expected that financial institutions that are highly exposed to the oil and gas sector might be affected by the falling crude oil prices.

But Ariyibi said in an interactive section with journalists that the bank’s loans portfolio was well structured to mitigate against non-performance in any sector of the economy.

N1000 naira noteHe added that FBN Holdings has been able to moderate the adverse impact of regulatory headwinds through increased internal efficiency, pointing out that the third quarter earnings of the bank underlined the improvements in its operational efficiency.

According to him, the third quarter earnings reaffirmed First Bank’s position not only as the largest and biggest bank in terms of network and assets, but the strongest supporter and financier of the productive sector.
Ariyibi disclosed that the bear run in the stock market notwithstanding, investors would continue to receive good returns on from FBN Holdings.

“What we do is to ensure we sweat the capital and ensure we get adequate returns. If you look at our results from 2010 to 2014, in terms of dividend payment pay-out, we have paid 10 kobo, 60 kobo, 80 kobo, 100 kobo and 110 kobo in the last five years. If you look at that, that gives a cumulative annual growth rate of 16 per cent dividend pay-out, there is no other company that can boast of this on the stock exchange and we are progressing on this,” Ariyibi said.

He attributed the relative undervaluation of the company’s stock to a section of the previous Pension Reform Act that prevented pension fund administrators (PFAs) from investing in new companies that have not made profit and declare dividend in at least three of the last five years.

According to him, because FBN Holdings was listed as new company when First Bank adopted the holding company structure, some pension fund administrators from investing the stock as stipulated in that Pension Reform Act.

Ariyibi, however, noted that with the emergence of the new Pension Act 2014 and removal of the inhibiting section, FBN Holdings will be the toast of the PFAs once the National Pension Commission releases its new guideline for pension investment.

He said First Bank has imbibed all the existing and upcoming regulatory changes, was better position to sustain compliance with regulatory benchmarks including the upcoming increase in capital adequacy ratio for systemically important international commercial banks to 16 per cent by April 2015, as against 15 per cent for other international commercial banks not deemed as systemically important banks.


– This Day

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