FBN Holdings Set to Cut Jobs in Bid to Reverse 82% Profit Slide

In a bid to overturn the 2015 82% profit plunge, FBN Holdings Plc has unveiled plans to cut jobs and focus less on providing loans to the oil industry.

According to the chief executive officer of FirstBank Nigeria Limited, Adesola Adeduntan, the lender expects 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 percent.

The bank is also targeting a cost-to-income ratio of 55 percent in two years’ time from 59 percent, he said.

Bloomberg quoted him as saying: “ROE will be much better than last year. At a minimum, we should triple it. We do not shy away from taking difficult decisions. We used to have above 8,000 people. We’ll push it down, gradually, to 7,000.”

Net profit fell to N15 billion from N84 billion 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.

Growth decelerated to 2.8 percent in 2015, the lowest level since 1999, and may worsen to 2.3 percent this year, according to the International Monetary Fund.

First Bank’s non-performing loans ratio stood at 22 percent at the end of March, compared with 3.8 percent a year earlier. Reducing that figure is the “number one priority,” said Adeduntan.

The bank will do that by reducing the proportion of its lending to the oil and gas sector, currently at about 39 per cent of total loans, and focusing more on blue-chip companies in other industries, he said.