First Bank Retains Leadership With N1.582tr First Quarter Deposits.
Nigerian banks, last week, began the gradual release of their score-cards for the first three months or first quarter of 2011, indicating that their performances were much in line, or even slightly better than those for the year ended December 31, 2010.

Already, helped by the uniform year-end decreed by the Central Bank of Nigeria (CBN), it is now very easy to know which bank is number one in terms of earnings income, profit and shareholders’ funds, among others. It is also easier today to track which among them is the fastest growing, most customer-friendly, or even the most accepted brand.

One measure of customer acceptability and confidence remains the quantum of deposit held by banks in their vaults across the country.

First Bank, according to the un-audited result for the first quarter ended March 31, 2011, published last week, reported a N1.582 trillion deposit base. This represents a N132 billion or 9.10 per cent growth over the N1.45 trillion reported in the corresponding period of 2010, retaining the premier position among its peers.

Compared to those of other banks that have published their results for the January-March quarter, First Bank’s deposit base outpaced the N863.472 billion reported by Guaranty Trust Bank in the same period, which was N102.277 billion or 13.43 per cent better than the N761.195 billion of the preceding first quarter.

In percentage terms however, Access Bank reported the biggest growth in deposit within the period, rising by N102.07 billion or 20.96 per cent to N588.995 billion from N486.925 billion, a year earlier.

First Bank First quarter outing.

A further breakdown of the first quarter result showed that First Bank’s earnings rose to N63.261 billion from N62.399 billion, out of which profit before tax climbed to N15.718 billion, compared with previous first quarter’s N15.42 billion. Net profit stood at N12.336 billion in the first quarter of 2010, as against previous first quarter’s N12.574 billion.

A breakdown of the figures by First Bank showed that operating income soared by 34.1 per cent from N40.1 billion in March 2010 to N53.8 billion, while cost-to-income ratio stood at 64 per cent, as against 65 per cent, a year earlier.

First Bank Total assets rose slightly also by 8.9 per cent to N2.5 trillion from N2.3 trillion in the corresponding period of 2010; while loans and advances grew by 18 per cent from N1.1 trillion in 2010 to N1.6 trillion; just as deposit base grew by7 12.5 per cent from 1.4 trillion to N1.6 trillion. First Bank Shareholders’ fund rose to N340.6 billion, up by 10.0 per cent from N309.6 billion, a year earlier

Group Managing Director of First Bank of Nigeria, Bisi Onasanya, was quoted in a statement last week, as saying that the First Bank successfully grew its balance sheet within the period, among others, while maintaining “our strong capital position with a capital adequacy ratio of 19 per cent and have also recorded a rise in profitability, driven by increased market share, steadily better cost control and reduced impairments.”

“Our commitment of continuous implementation of our transformation agenda remains a key strategic focus. As the consolidation activity in the sector moves forward and the competitive landscape changes, we look forward to continuing to develop and deliver high quality services to our customers, capitalising on market opportunities to accelerate our strategic growth, ramp up revenue to increase shareholder value and reaffirm our leading position in sub-Saharan Africa.”

According to the risk and regulatory ratios provided, the bank reported that its first quarter performance translated to a net loan-to-deposit ratio of 80 per cent (representing an improvement over the 76 per cent achieved at the end of the 2010 first quarter).

In an earlier statement explaining its full year performance, the bank said it “entered 2011 in a position of strength,” assuring that “the consolidation activity in the sector is likely to redefine the Nigerian banking landscape. As a management team, we look forward to continuing to develop and deliver high quality services to our customers while using the opportunities in the market place to focus deeply on accelerated strategic organic growth locally to increase shareholder value.”

First Bank Retains Leadership With N1.582tr First Quarter Deposits.

2010 full year.

The bank’s first quarter deposit base was consistent with the pattern at the end of 2010, when it reported a total demand deposit of N1.45 trillion, which placed it ahead of peers like Zenith Bank, N1.318 trillion; United Bank for Africa, N1.267 trillion; GTBank, N761.19 billion; and Access Bank, N486.925 billion; based on data from those that have so far published their year-end financials so far.

First Bank reported N230.6 billion earnings income, the biggest for the period, compared with N193.9 in the nine months to December 2009. PBT for the period rose by about N28.9 billion or 217.29 per cent N43.2 billion, from the N13.3 billion reported a year earlier; just as net profit jumped from N4.9 billion in 2009 to N33.4 billion, representing an increase of about N28.5 billion or 581.63 per cent.

A breakdown of the result, according to the bank, showed a reduction in net interest margin to 6.3 per cent from 7.1 per cent, in what it said reflected the low interest rate environment, just as there was a sharp decline in cost of funds to 3.4 per cent from 6.1 per cent in December 2009, helped by change in pricing, and mix, of deposits.

Net loan-to-customer deposit ratio, the statement added, stood at 79.4 per cent, from 80.9 per cent, even as capital adequacy increased to 20.35 per cent from 15.8 per cent. Non-performing loan ratio within the period improved from 8.2 per cent to 7.7 per cent; there was also a drop in cost of risk to 1.8 per cent, including an N11.4 billion general provision charge on its performing loan book, compared with the previous 4.2 per cent.

Onasanya, expressed happiness at the significant improvements in its fundamentals, “despite the challenging operating conditions that the Nigerian banking sector endured in 2010 the after effects of the financial crisis and continued net interest margin pressure.”

First Bank, he stressed, retained its market leadership position, as it continues to grow its loan book, amidst “strong profitability, while retaining a robust capital position.”

“We have proactively taken the 1 per cent general provision charge (amounting to N11.4 billion) on our performing loan portfolio in spite of the waiver on the general loan loss provision for banks granted by the Nigerian Accounting Standards Board for the year ended 31 December, 2010 - underscoring our return to a strong trajectory of profitability”.

“This strong performance, coupled with our commitment to intensify our efforts on the execution of our transformation agenda, positions the FirstBank Group quite well to deliver long-term profitable growth by building greater franchises and creating value for all our stakeholders. This way, we will defend and extend our affirmed leadership position and reinforce our aspiration to become the dominant financial services group in sub-Saharan Africa,” the statement added.

Balance sheet information for the period also revealed that total assets and contingents liabilities rose by 5.8 per cent to N3.3 trillion from N3.1 trillion, just as net loans and advances (including advances under finance leases) closed at N1.15 trillion, increasing by 5.5 per cent from N1.09 trillion at the end of December 2009. Shareholders’ funds, within the period, however grew faster, notching 9.4 per cent to N340.6 billion, compared with N311.3 billion in the comparative period of 2009.

Conclusion.

Commenting on the 2010 audited result of First Bank, analysts at Afrinvest (WA) in a note to clients recently, agreed that earnings “earnings were in line with the industry trend and our expectations of N237.3 billion,” adding that although bottom-line improved also, “overall performance fell below expectations.”

However, the reported reckoned that “First Bank has taken the much debated general provisioning of 1.0 per cent of performing loans (estimated at about N10.0 billion) as required by the Nigerian GAAP. This may have been responsible for this below-than expected performance. We would however seek to know if this charge will come as a write-back in the 2011 financial year, as the charge was waived for banks for 2010 full year numbers.

“In summary, we believe the bank is fairly priced at current valuation levels and do not see any significant upside potential in the short term, especially on the back of this performance. By our estimates, the bank currently trades at a trailing P/E multiple of 14.2x, a premium to the Tier-1 bank average of 12.0x,” Afrinvest told its clients.

To enable analysts and investors get further insights into the full year and first quarter results, the bank’s management, on Thursday, April 28, 2011, hosted a teleconference. Details of the conference’s outcome could not be ascertained on Monday evening.

First Bank Retains Leadership With N1.582tr First Quarter Deposits.