FirstBank Nigeria 2010 Result Presentation

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FirstBank Annual Report 2010

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FirstBank Nigeria 2010 Result Presentation

  1. 1. First Bank of Nigeria Results Presentation For the nine months ended September 2010www.firstbanknigeria.com/investorrelations
  2. 2. Cautionary NoteThis presentation is based on the financial results of FirstBank s unaudited results for the period ended September30, 2010, consistent with Nigerian GAAP. First Bank of Nigeria Plc ( FirstBank or the Bank ) has obtained some information fromsources it believes to be credible. Although FirstBank has taken all reasonable care to ensure that all information herein is accurateand correct, FirstBank makes no representation or warranty, express or implied, as to the accuracy, correctness or completeness ofthe information. In addition, some of the information in this presentation may be condensed or incomplete, and this presentation maynot contain all material information in respect of FirstBank.This presentation contains forward-looking statements which reflect managements expectations regarding the group s futuregrowth, results of operations, performance, business prospects and opportunities. Wherever possible, words such as"anticipate", "believe", "expects", "intend" "estimate", "project", "target", "risks", "goals" and similar terms and phrases have been usedto identify the forward-looking statements. These statements reflect managements current beliefs and are based on informationcurrently available to the Banks management. Certain material factors or assumptions have been applied in drawing the conclusionscontained in the forward-looking statements. These factors or assumptions are subject to inherent risks and uncertainties surroundingfuture expectations generally.FirstBank cautions readers that a number of factors could cause actual results, performance or achievements to differ materially fromthe results discussed or implied in the forward-looking statements. These factors should be considered carefully and undue relianceshould not be placed on the forward-looking statements. For additional information with respect to certain of these risks orfactors, reference should be made to the Banks continuous disclosure materials filed from time to time with the Nigerian bankingregulatory authorities. The Bank disclaims any intention or obligation to update or revise any forward-looking statements, whether as aresult of new information, future events or otherwise.Kindly note that in this presentation, all reference to: Q1 09 indicates the period April to June 2009 H1 09 indicates the period April to September 2009 9 Mths 09 indicates the period April to December 2009 2
  3. 3. Outline 1 Key Observations in Q3 10 2 Financial Review 3 Summary & Outlook 3
  4. 4. Headlines for Q3 10 - Road Map Stable Improving Improving Strong & Liquid Highlights Core Profitability Funding Mix Balance Sheet Earnings & Margins Healthy Volatility In Slightly Pricing Macro Economic Yields & Weaker Pressure on Considerations Activity Interest Rates Naira Asset book Strategic Service Performance Growth Talent Delivery Excellence Management 4
  5. 5. Highlights What FirstBank Delivered in Q3 10 Strong & liquid balance Sheet 17% Capital Adequacy Ratio, significantly above regulatory requirements with Tier 1 capital ratio of 15.4% Stable net loan to deposit ratio of 74.1% Liquidity ratio of 64.7% (Sept 09: 78.7%) Non-performing loan ratio of 5.8% (Sept 09: 8.1%) Business volume Key performance indicators reflecting QoQ and YoY growth in deposit of 8.82% and 29.38%Highlights a satisfactory result in challenging conditions respectively. YTD growth of 15.8% to N1.6tn Encouraging lending growth up; 4.98% QoQ, 5.36% YTD and 32% YoY. Earnings Resilient gross earnings at N177bn, down 10.57% YoY Improved mix of earnings with non-interest income contributing 23% (Sept 2009: 17.6%) Profitability Expanding net interest margins Profit before tax of N40.7bn.(Year to Sept 09: N6.6bn loss) ROAE: 14.1% ROAA:1.9% Cumulative earnings per share of N1.33 from (N0.43) in year to Sept 2009 5
  6. 6. Macro Considerations Global World economic growth was predominantly driven by emerging and developing economies. Growth in advanced economies restrained by low consumer spending, high unemployment levels, stagnant incomes and reduced household wealth Risk aversion prevalent as investors move to quality assets Uptrend in oil prices due to supply constraints, weakened dollar and expectation of a cold winter in temperate regions. Nigeria Inflation worries emerged in the quarter under review rising by 13.6% as at September Economic outputMacro healthy, but risk 2010.Considerations aversion still very Q3 GDP growth of 7.72% was driven mainly by the non-oil sector but supported by prevalent improving oil sector dynamics. Strong output growth has failed to support job creation especially in the formal sector Interest rates and bond yields declined for the larger part of the year on excess liquidity concerns. Recent hike in benchmark rate and illiquidity has led to a spike in short term interest rates and bond yields. Equities under pressure with the ASI declining by 8.29% QoQ bringing YTD performance to 10.68%. The Naira depreciated slightly by 0.91% in Q3 over concerns of reduction in foreign reserves as well as apprehension ahead of the 2011 elections. Banking Industry The CBN focused on strengthening the regulatory framework for the industry. The new prudential guidelines provide clearer provisioning method and matches nature of loans advanced Dismantling of the universal banking model 6
  7. 7. Macro Considerations 40 33,000 Bond yields, NIBOR and NSE 270 Naira against major currencies NSE All Share Index return against inflation 30 255 31,000 20 240 29,000 225 10 210 27,000 % 0N Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 195 -10 25,000 180 -20 165 23,000 -30 150 21,000 -40 135 120 19,000 -50 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 10Y FGN Bond Yields NIBOR GBP Euro USD Inflation NSE YTD (%) 7
  8. 8. Strategic Delivery Strategic focus on being The leader, The Best Attain full benefits of scale and scope by Growth Growth accelerating growth and diversification of assets, revenue and profits Service Drive unparallel service levels by developingStrategic Key objective: Be the clear leader Excellence world class institutional processes, systems &Delivery and Nigeria s bank of First choice capabilities Performance Deliver unmatched results by creating a Management performance culture with clear individual accountability at all levels Become a hub for the best industry talent; Talent cultivate a highly-motivated, capable, and Management entrepreneurial workforce 8
  9. 9. Strategic Delivery - Growth Restructuring for Growth Significant SSA expansion and growth in Group Governance: We are optimising our group structure for tax banking with selective efficiency, legal/regulatory compliance and to ensure our structure supports international forays in non- our aspirations. Build scale bank financial services internationally.. Focus on driving Investment Banking & Asset Mgt: On going realignment of FBN LONG TERM economies of scale and Capital, First Funds, FBN Securities and First Trustees to drive increased 2013 - 2014 scope across international synergies network and portfolio of FBN Life Assurance Ltd : Our JV with Sanlam commenced operations in businesses September, offering group life products, with a view to expanding theOverview of Growth Strategy product offerings in the fourth quarter. A Chief Operating Officer from South Drive bank Africa has also been recruited. transformation to Holding Company Structure remains our preference in complying with the completion Diversify group Build scale in CBN guidelines. Critical considerations still being resolved, however, border and transform investment banking and on tax efficiency bank... insurance and leverage Commencement of new operating model within the bank along MEDIUM TERM group synergies 2011 - 2012 Commence SSA institutional, corporate, retail and public customer segments expected to regional expansion in drive deeper product penetration and sector expertise; relationship earnest management based on deep understanding of customer needs; continued focus on innovative ways to service the retail market with technology and Drive organic and simple easy-to-use products inorganic expansion International Expansion: Our representative offices in South Africa and Continue aggressive Consolidate in bank transformation China have continued to generate new business opportunities/referrals. We Nigeria... Structure for growth in will continue to expand in identified markets through a combination of SHORT TERM investment banking and acquisitions and greenfield strategies driven by consideration of 2010 insurance Rep office expansion macroeconomics, size, potential growth rate of banking industry and market conduciveness amongst other strategic factors Brand Transformation: Continued modernisation of the image and perception of the FirstBank brand 9
  10. 10. Strategic Delivery GrowthProposed Holding Company Structure FBN HOLDING PLC CORPORATE SHARED CENTRE SERVICES INVESTMENTBUSINESS FIRST BANK OF EMERGING BANKING & ASSET INSURANCEGROUPS NIGERIA VENTURES MANAGEMENT REP OFFICE SA FIRST TRUSTEES FBN LIFE FBN REAL INSURANCE ESTATE REP OFFICE FIRST FUNDS FBN INSURANCE FBN CHINA FBN SECURITIES BROKERS MICROFINANCE FBN BDC FBN CAPITAL FBN MORTGAGES FBN BANK (UK) FIRST REGISTRARS 10
  11. 11. Strategic Delivery Growth New Bank Operating Model New Bank Structure FirstBank1 2 3 4 5Institutional Corporate Retail Public Sector Public Sector Operations Risk FinanceBanking Banking Banking North SouthBank Customer Segments Company Secretary Human Capital Mgt 1Insti- HNI Federal tutional Gov t Legal 4 5 Corporate 2 Corpo- Affluent Trans- State formation rate Gov t 3 Internal audit* Enterprise Mass Local Strategy & market Corporate Gov t Development Corporate Businesses Individuals Public sector Commu- nications *Reports to Board of Directors via Board Audit and Risk Assessment Committee 11
  12. 12. Strategic Delivery Service ExcellenceWe highlighted five key initiatives to transform our service delivery based on customer feedback and our competitive environment Transforming Service Delivery Issue Resolution/ Centralized Processing Branch Manning/Front-Line Channel Optimization Customer Experience & Branch Process Transformation Transformation & Migration reengineering Implement a Optimize branch Transform the branch Optimize our manning Optimize costs and framework that enables operations by centralizing experience by structure , empower increase customer collection, resolution, non-customer ensuring all elements staff and align our satisfaction by and future prevention facing/transactional are in line with our front-line staff with our ensuring alternative of various customer processes, and service delivery service delivery channels work, and issues redesigning/automating aspirations mandate migrating customers to Set expectations on remaining processes (people, processes, appropriate channel customer experience at within the branch layout, ambience, etc) (based on segment each touch point, and Improve standardization needs and monitor compliance of service, and requirements) processing speed How do we optimize How can we drive How can we minimize How can we How can we identify our manning levels customer self- transaction time and maximize each every customer issue and ensure our service service ? create more time for customer visit to the and prevent it from objectives are sales/customer branch for sales? ever happening again? translated through our interaction? frontline staff? 12
  13. 13. Strategic Delivery Service ExcellenceCPC/Branch Process Re-engineering: We are taking an end-to-end approach in redesigning branchprocesses Objective Sample Processes Example Activities Improve Account Opening Fulfilment Account creation/data standardization and Account maintenance entry leverage economies Retail loan processing Welcome Pack creation of scale for non- Retail loan maintenance (cheque book, alternate Centralisation customer facing Corporate Loan setup channels set-up, ATM activities COT ammendments card, etc) Fixed deposit processing Salary processing Cheque confirmation Confirmation process Improve turnaround Salary processing Collection, verification and Automation/ time; increase efficiencies, and Intersol Cheque Book/Savings upload Simplification Withdrawal booklet request reduce error rates Form redesign De-congest the ATM Balance enquiries branch; drive self- Internet Banking Cash Withdrawals below Channel service to improve Contact Centre threshold Migration customer Funds transfer satisfaction and Cheque book requests optimise costs Cheque confirmation 13
  14. 14. Strategic Delivery Service ExcellenceBranch Transformation: We are developing a prototype branch to reflect our end-to end servicedelivery aspirations Pilot approach to test the concept and Raise awareness and consideration of bank offerings assess impact on Leverage redesigned processes & channel migration strategy to Selected POC branches meet/exceed service expectations and create cost-efficienciesObjectives Attract sales-related visits using façade Improve perception - leave a lasting impression Physical branch format Staff factors (e.g. reporting (e.g. lines, skills, competencies and layout, communications mindsets/ culture) media and aesthetics/ design) Processes Marketing Tactics Tracking (targeted product and analysis of placements; tools to drive performance against customer engagement, etc) objectives to enable effective management 14
  15. 15. Strategic Delivery Service ExcellenceManning/Front-Line Transformation: Implementation of the new operations structure providing aplatform to address both hard and soft issuesHard Issues (Structural) Soft Issues (Engagement) Job grade alignment Role-Fit Manning levels Knowledge Gap Transaction Volumes (Branch categorization) Transaction Types Work Overload Leave days Career Progression Simplified Structure & synchronized with CPC/branch process re-engineering Service Bottlenecks (review of limits for all Unit Heads) Improved Core/Non-Core staff mix 15
  16. 16. Strategic Delivery Service ExcellenceChannel Optimization & Migration: Improving ATM uptime is top priority; driving online banking andcontact centre awareness/usage also key Current Initiatives Quick Fixes Weekly ATM optimization report, Name N Shame Verve card supply ATM Optimization Structural Regionalized ATM support structure (IT) Monitoring tool; Vendor support & maintenance agreements/SLAs; ATM Branch Operations (Operations) ATM Fit notes; Clear ATM custodian role training, monitoring and consequence management Card production & issuance ATM reconciliation (Internal Control/Audit) Increase accessibility by removing bottlenecks in user sign-up and password reset process Internet Banking Increase functionality (cheque confirmation) VOIP phones at branches to enable free-calls from branch On-going campaign to increase awareness/usage, coupled with additional functionality (e.g. cheque confirmation) Contact Centre Expand services Outbound (surveys, welcome calls, targeted marketing, collections, etc) 16
  17. 17. Strategic Delivery Service Excellence Cost Optimisation: We have made some progress against the key areas identified, but more work remains Projects Description Initiatives* Execute quick-win cost optimisation initiatives- waste Increased utilization of voice-over-IP (VOIP) Quick-Wins items with little to no impact on strategy/employee telephone usage in branches morale; sustainable long-term; can be done in a Deletion of Hold Statements relatively quick time frame Email statement drive Elimination of Double Ply flow line purchase Diesel/Early Closure Assess current manning levels and manning Execution ongoing through implementation of new Costs Structure approach (with an initial focus on branch operations structure Manning operations), and identify ways to improve our operating efficiency and provide more satisfying jobs for our staff Review current expense control policies and Centralised Admin Expense Control procedures, and identify opportunities for Fuel card implementation (H/O; Lagos, Abuja, PH) improvement, especially for controllable costs Review of Hotel Accommodation Policy Travel Policy amendments Review big-ticket maintenance items and identify H/O Centralized Fleet Management Depreciation/ areas where we can eliminate and/or optimise our Maintenance maintenance spend Evaluate alternative business models for our existing operations (e.g. outsourcing, in-sourcing, leasing, etc) ~ 400 million naira+ estimated annual impact at steady state* Initiatives in italics have not yet been included in the annual savings estimate 17
  18. 18. Strategic Delivery Performance Management / Talent Staff rejuvenation/corporate workforce renewal Performance Management / Talent Implementation of the balanced score card Training intervention has been designed and selected to support the bank s strategic aspirations The primary focus of training up till the end of September was on product, banking, IT and credit Commenced the use of in-house developed e-learning courses The smooth take off of the new operating model attests to the efficacy of the orientation programmes 18
  19. 19. Outline1 Key Observations in Q3 102 Financial Review3 Summary & Outlook 19
  20. 20. Evolution of nine months to September 2010 group profit after tax N bn 136.3 40.8 5.7 46.7 40.7 83.9 32.6 8.1 Interest Income Interest Expense Non-Interest Income Provisions Operating Expenses Profit Before Taxation Tax Profit After Tax 20
  21. 21. Top line performance remains resilient in the face of challenging operating conditions Gross Earnings N bn Interest Income 5% 17% 14% 14% 12% 16% 196 177 34 41 54% 78% 125 122 66% 73% 73% 70% 22 28 162 62 61 136 11% 11 103 12 1% 94 0% 0% 0% 50 50 1% 19% 20% 17% 15% 9% 14% Q109 H109 9 Mths09 Q110 H110 9 Mths10 Q109 H109 9 Mths09 Q110 H110 9 Mths10 Interest Income Non Interest Income Placements Treasury Bills Loans and Advances Others** Non-Interest Income Comments Year-on-year decline in gross earnings due to low interest rate 27% 29% 31% regime, liquidity glut and slow capital market recovery 38% 40% 40% Other fees and commissions* Slower pace of economic recovery impacting transaction volumes 9% 8% 5% Improving contribution to top line by non-interest income 12% 10% 12% 10% 9% 9% Remittance Migration to a much more customer focused operating model fees /Management fees 8% 7% 8% expected to drive earnings growth via increased share of clients Exchange gain/FX Income 28% 29% wallet 33% 37% 30% 29% Commission on turnover Expect Q4 rise in yields to enhance interest income Phased approach to increasing proportion of transactions with 24% 24% Other income shorter tenors and higher yields expected to benefit growth in non- 18% 14% 14% 8% interest income Q109 H109 9 Mths09 Q110 H110 9 Mths10*Credit related fees , Letters of Credit commissions and fees , Financial advisory fees, Gains on disposal of investment properties , Commission on insurance premium , Commission on western union transfers , Loss/(Profit) ondisposal of property and equipment. **Advances under finance lease and commission on managed funds 21
  22. 22. Our spreads have improved, benefitting from historically low fundingcosts, and contributing to margin expansion Yield Net Interest Margin 11.8% 11.2% 7.2%10.6% 6.7% 9.4% 6.0% 5.8% 8.2% 5.5% 7.6% 5.2% 7.4% 7.2% 7.2% 6.5% 96 90 4.1% 60 57 2.7% 28 28Q109 H109 9 Mths09 Q110 H110 9 Mths10 Q109 H109 9 Mths09 Q110 H110 9 Mths10 Yield on Interest Earning Assets Cost of Interest Bearing Liabilities Net Interest Income (Nbn) Net Interest Margin 22
  23. 23. We expect that our sustained investments in automation and staffrejuvenation will drive improvements in productivity in coming periods Operating Expense Breakdown (N bn) Provision for Credit and Other Losses (N bn) 84 40.6 78 0.1 6% 4% 29.5 30% 38% 55 0.0 49 7% 5% 7% 37% 7% 40% 40.5 23 26 29.5 7% 5% 7% 7% 41% 59% 39% 49% 5.7 7% 48% 7% 50% (1) 1.9 (1.5) 47% 46% 6.7 0.1 1.8 2.7 3.8 (1.0) (4.2) (4.7) Q109 H109 9 Mths09 Q110 H110 9 Mths10 Q109 H109 9 Mths09 Q110 H110 9 Mths10 Staff Cost Depreciation Admin and General Expenses NDIC Premium Loan Loss Provision Other Provisions Movement In Provision For Credit Related Cost Efficiency Losses (N bn) Pre-provisioning cost to income* Post-provisioning cost to income* 6.7 Operating Income Growth Operating expenses Growth 14% 13% 23.7 10% 12% 8% 83% 9% 2% 55.1 64% 65% 63% 64% 59% 61% 60% 62% 126% 38.0 -2% -10% 80% -17% 65% 1-Jan-10 Additional Amounts w/off 30-Sep-10 Provision Q109 Q209 Q309 Q110 Q210 Q310*cost to income ratio operating expenses/operating income 23
  24. 24. Steady improvement in profitability Profit Before Tax (N bn) 9 months 2010 PBT Split 41 32 Retail & Corporate Banking 90.3% Investment & Capital Markets 7.3% Asset Management 0.3% 15 N40.7bn 14 12 Mortgage Banking -0.3% 3 Other* 2.1%Q109 H109 9 Mths09 Q110 H110 9 Mths10 ROE, ROAA & EPS H1 2010 PBT Split 15.9% 14.1% 16.4% Retail & Corporate Banking 9.8% 72.5% Investment & Capital Markets 10.5% 3.0% 2.2% 1.9% Asset Management 14.7% 1.7% 1.2% 2.2% N31.7bn 0.4% Mortgage Banking 0.0% 0.2% 1.37 0.15 0.32 1.70 1.75 1.33 Other* 2.2% Q109 H109 9 Mths09 Q110 H110 9 Mths10 EPS (Kobo) ROAE ROAA * Insurance, Pension Custodians, Bureau de Change & First Funds 24
  25. 25. Benefiting from our strong brand and continued customer confidence and loyalty, we havecontinued to grow and improve the quality of our deposit funding especially at the low costend Balance Sheet Structure Sept 10 (N bn) Deposits (N bn) 2,424 2,424 Other Assets 5% 129 15.8% Managed Funds 2% 55 182 Other Liabilities 17% 73 Other Borrowings 3% 8.6% Investments 21% 490 227 Due to Other Banks 9% 1,550 1,407 1,427 1,339 1,198 1,150Net Loans & Advances 47% 1,148 1,550 Deposits 64% Treasury Bills 1% 25 Inter Bank & Cash 24% 577 83 Short Term Liabilities 3% 309 Capital & Reserves 13% Assets Liabilities Q109 H109 9 Mths09 Q110 H110 9 Mths10 Deposit Mix Deposit by Maturity (bank only) Current deposits Savings deposits Term deposits Domiciliary deposit 8.8% 8.5% 9.2% 8.5% 9.2% 10.2% 15.0% 9.1% 15.0% 10% 9% 9% 9% 15.5% 16.0% 16.3% 14% 15% 25% 14.1% 13.7% 25.2% 13.9% 14.1% Over 12 months 31% 31% 31% 19% 16% 14.0% 6-12 months 24.8% 25.3% 25.4% 24.1% 23.4% 3-6 months 28% 29% 28% 20.8% 21% 22% 20% 1-3 months 0 - 30 days 39% 40% 39% 38% 41% 36.8% 37.4% 35.6% 37.2% 36.6% 36.1% 38% Q109 H109 9 Mths09 Q110 H110 9 Mths10 Q109 H109 9 Mths09 Q110 H110 9 Mths10 25
  26. 26. Our capital and regulatory ratios are significantly in excess of regulatoryrequirements, and adequate to support our business N bn X X 78.7% X 75.6% 385 373 X X 67.0% 45 X 64.8% 336 335 335 336 63.5% 69 X 62.0% 29 32 X 32 31 X 46.2% 42.9% 40.4% 41.3% X 36.7% X 33.2% X 25.9% 22.4% 19.4% 19.9% 340 18.0% X 22.8% 17.0% 307 303 303 303 304 X 20.5% 17.5% Xxx 16.2% 16.3% 15.4% 1,694 1,733 1,857 1,633 1,403 1,411 Q109 H109 9 Mths09 Q110 H110 9 Mths10 Q109 H109 9 Mths09 Q110 H110 9 Mths10 total RWA (Nbn) Tier 1 capital adequacy ratio % Tier 1 Capital Tier 2 Capital total capital adequacy ratio % Liquidity Ratio (Group) Liquidity Ratio (Bank) 26
  27. 27. We are gradually improving the mix of our interest earning assets in favourof higher yielding assets, whilst maintaining a diversified loan book Interest Earning Assets Net Loans & Advances** (N bn) N1,917 bn N2,302 bn 2.6% 2.9% 5.4% 2.4% 2.4% 4.9% Cash and balances with Central 15.5% Bank 1,148 21.3% 1,089 1,074 1,094 0.3% Managed funds 0.3% 913 Investment 868 32.7% 22.2% Investment property 1.1% 1.2% Due from other banks 49.9% Treasury bills 45.3% Loans and advances to customers Sep-09 Sep-10 Q109 H109 9 Mths09 Q110 H110 9 Mths10 Gross Loans and Advances (sector exposure) Business Lines (Bank Only) (Bank Only) Public Sector 0.6% 8%Information & (6.1%) 6% 19.6% Finance & Insurance General 14.6% Capital Commerce* 20.1% (21.4%) Power & 8% 5.7% (6.4%) (14.5%) Market* 3.1% Energy* 0.1% 2.6% (2.9%) 11% 4.6% Transport Money market line (0.1%) 9.6%0.1% (0.1%) Financial instituitions & treasury Professional* 0.6% (0.5%) 16.7% Public sector Education* 0.5% N1,088bn 32% (0.5%) Admin & Support 0.8% Consumer Services* 0.3% General Commerce (0.3%) 1% Retail 6.9% (4.6%) Agric/Misc 45.5% 34% Corporate Real Estate 9.8% Oil & Gas 24.1% Human Health* (10.6%) (23.2%) 0.1% (0.1%) Construction Agriculture 0.6% (0.6%) Manufacturing 0.8% (0.8%) Sep-09 Sep-10 8.5% (7.3%) ( ) June 2010 * New sectors introduced by the CBN **includes advances under finance lease 27
  28. 28. Ultimately, our key focus is on improving the quality and efficiency ofour balance sheet By Type (bank only) Ageing Analysis of Performing Loan Book (bank only) N974 bn N960 bn N1,039 bn 1.7% 2.0% 1.4% 1.5% 1.5% 1.4% 17.5% 14.0% 16.6% 14.4% 13.9% 21.2% 9.9% 6.8% 6.5% 8.5% 8.5% 10.4% 12.5% 12.4% 14.3% Others 2.2% 1.6% 61 - 90 Days Overdrafts 2.5% 31 - 60 Days 74.7% 75.2% 77.5% 76.3% Commercial Papers 68.0% 0 - 30 Days 62.7% Term Loans 89.3% 88.0% 85.1% Q109 H109 9 Mths09 Q110 H110 9 Mths10 Q110 H110 9 Mths10 Balance Sheet Efficiency Comment Leverage Ratio (Times) Loan to Deposit Ratio Steady growth in loan book, driven by the corporate, retail and consumer 81.3% segments79.4% Reduced rate of new NPL formation due to remedial management and 76.3% 76.7% enhanced monitoring by relationship mangers 74.1% Continually reviewing portfolio in line with prudential guidelines, whilst 72.5% seeking to optimise volume growth Phased approach to skewing loan book to shorter tenored, higher yielding 7.4 7.8 transactions 7.0 7.3 6.5 Focus on increasing share of wallet of current clientele 5.7Q109 H109 9 Mths09 Q110 H110 9 Mths10 28
  29. 29. We have continued to focus on our non-performing loan portfolio, in order to drive sustained recoveries NPL & Coverage Ratios NPL Ageing Analysis (bank only) NPL NPL Coverage NPL % 11.1% 7.2% 8.4% 13.4% 14.4% 16.7% 77.2% Interest in suspense 72.3% 70.1% 71.5% 67.1% 22.8% 61.4% 32.2% 39.7% 46.0% 44.8% 35.6% above 360 days (Lost) 180 - 359 days 35.9% (Doubtful) 8.1% 8.2% 7.9% 5.7% 5.8% 29.7% 13.0% 4.7% 34.8% 30.4% 90 - 179 days 20.8% (Substandard) 94 91 74 65 70 44 33.8% 27.0% 26.9% 17.1% 21.0% 17.4% Q109 H109 9 Mths09 Q110 H110 9 Mths10 Q109 H109 9 Mths09 Q110 H110 9 Mths10 NPL Sector Exposure Sept 2010 (bank only) NPL By Business Lines (bank only) Agriculture 1.8% (0.9%) Manufacturing 0.5% 1.3% 0.6% 0.0% 0.3% 0.9% 1.7% (4.7%) 18.6% 23.1% 17.0% 15.9% Agric/Miscellaneous 29.0% 0.2% 0.1% 0.3% General 24.6% (18.8%) Construction 38.9% Oil & Gas 13.6% 0.3% 11.9% 14.4% 1.2% (1.1%) 0.0% 16.7% Financial instituitions and (13.6%) 15.9% treasury General Commerce 11.4% Government 0.2% 0.0% (0.3%) 6.4% (5.4%) 23.1% Public sector Transportation 16.3% 28.1% 16.9% 30.2% N64.4bn 0.3% (0.2%) 27.7% ConsumerPower & Utility 0.2% (2.2%) Information & 17.5% Communication Retail Finance & Insurance 0.3% (0.2%) 46.8% 42.1% 39.8% 15.9% (17.0%) 34.4% 32.8% Corporate Real Estate 35.1% 25.9% (35.6%) Q109 H109 9 Mths09 Q110 H110 9 Mths10 29
  30. 30. Facilities Against Shares portfolio characteristics (Bank Only) Mar 10 Jun - 10 Sep - 10 1 Facility Against Shares (FAS)1 - gross N53.1bn N48.7bn N28.7bn 2 Collateral value FAS1 N49.2b N51.1b N28.9bn 3 Portfolio Coverage of FAS1 92.7% 104.8% 100.8% 4 FAS/Total Loans and advances 4.8% 4.6% 2.6% 5 Non-Performing FAS1 Loans N30.1bn N23.1bn N10.1bn 6 Non-Performing FAS1 Loans (%) 56.7% 47.5% 35.2% 7 Provisions held against FAS1 N23.5b N19.2bn N5.84bn 8 FAS NPL Coverage 78.2% 82.8% 57.8% 9 % FAS1 backed by shares in private placement 35.0% 35.3% 50.9% 10 Margin Loan Exposure N11.8bn N13.9bn N5.9bn 11 Percentage of margin loans to total LAD 1.2% 1.3% 0.5% 12 Collateral value of total margin loans N6.9bn N8.9bn N2.2bn 13 Non-performing margin loans N11.7bn N5.8bn N3.8bn 14 Collateral value of non-performing margin loans N4.9bn N8.84bn N462m 15 % of FAS exposure renegotiated/restructured* 2.8% 5.9% 18%1FAS Includes margin loans and other loans secured by shares*Largely margin loan accounts Figures may not add up due to rounding 30
  31. 31. Outline 1 Key Observations in Q3 10 2 Financial Review 3 Summary & Outlook 31
  32. 32. Summary and Outlook SSA underpinned by strong macroeconomic fundamentals and Nigerian imperatives global economic recovery: GDP growth forecast of 5% in 2010 and Fully optimise and expand our diversified financial services 5.5% in 2011 Improve product and sector expertise with deep understanding of customer needs Nigeria is one of the fastest growing oil exporting economies in Improve existing client business volume and increase Africa with GDP growth forecast of 7.4% in 2010 and 2011 (South clients Africa 3-3.5% over the same periods). Deploy balance sheet towards higher yielding assets Optimisation of liquid assets The Nigerian banking sector remains significantly underpenetrated, Brand transformation FirstBank has industry scale with 13% of total assets and 15% of total loans and is well positioned to grow its share of market International imperatives: Increase the Group s profile across Sub Saharan Africa via We continue to progress towards its objective of being the clear international expansion. Benefits include: leader and Nigeria s bank of first choice through the Greater earnings diversification implementation of a focused transformation programme. Increased shareholder value through higher ROE Enhance ability to effectively serve an increasingly In the near term, our objectives borders on growth and international profile of corporate customers. transformation of the Bank while creating growth options for the group Above all, we believe that by focusing on our outlined strategies and coming from a position of strength, we are well poised in Our medium term strategy is to defend our leadership position, delivering exceptional returns while consolidating, diversifying and whilst extending it across key dimensions (i.e. customers, brand, transforming the business and building scale internationally service etc) to achieve superior/sustainable financial results Build scale Diversify group and internationally transform bank Consolidate in Nigeria Significant SSA expansion and growth Drive bank in banking with selective transformation to Drive organic and international forays in completion inorganic expansion non-bank financial Build scale in inv. Continue aggressive services banking and insurance bank transformation Focus on driving and leverage group Structure for growth in economies of scale synergies inv. banking and and scope across Commence SSA insurance international network regional expansion in Rep office expansion; and portfolio of earnest initial SSA explorations businesses 2010 2011 - 2012 2013 - 2014 32

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