Business
Adeduntan: There is Significant Opportunity for Consolidation in Banking Sector
Published
6 years agoon
The Managing Director/CEO of First Bank of Nigeria Limited and Subsidiaries, Dr. Adesola Adeduntan, in this interview reveals that with about 12,000 agents across the entire network, the distribution of its automated teller machines across the country, the bank has built a solid foundation upon which it can rapidly grow its business and that the financial institution will continue to be a dominant player in the retail banking segment of the industry. Obinna Chima, Goddy Egene and Nume Ekeghe present the excerpts:
There was a major development in the banking industry some days ago, which saw Access Bank and Diamond Bank signing a business combination agreement. How did you receive the news considering that it is one that is going to shift the balance of power and ranking in the banking industry, and for FirstBank being one of the industry leaders, are you prepared to cope with the emerging competition in the industry?
We have had two waves of consolidation in the market. The first was in 2004-2005 which was orchestrated by Professor Chukuma Soludo. The second wave happened between 2009 under Governor Lamido Sanusi which was what saw to the acquisition of Intercontinental Bank by Access Bank. So, we have seen two big waves and there have been other minor waves. And if you also look at the number of tier 1 banks we have today in Nigeria, that is compare the size FirstBank, GTBank, Access Bank, Zenith Bank and the United Bank for Africa, when you put them on an African landscape, our banks are actually quite small. That is the truth.
In fact, from the last statistics I reviewed, there was no Nigerian bank in the top 10 banks in Africa. When you then realise the fact that Nigeria has the largest economy in Africa, but we are not in the top ten banks, that tells you two things: Firstly, that there is a significant opportunity for growth for banks but secondly opportunities for further consolidation. So what is contemplated by the merger agreement between Access Bank and Diamond Bank is not strange. For operators like us who have been watching this strategic landscape, it was not unexpected. For banks and indeed any institution or any business venture, you do have two opportunities or two key options of growth. You can decide to grow organically or you can decide to grow inorganically, which is what Access Bank is doing.
You may now go further to look at the tier 1 banks. There are banks in the tier 1 bucket who have never done any M&A and GTBank and Zenith Bank stand out. FirstBank has done one or two relatively small M&A which in reality you can take out. So it would appear that just looking at the market, that banks like FirstBank, GTBank and Zenith have perfected the act of growing organically. Whereas when you look at Access Bank, the bank was a major beneficiary of 2004/2005 consolidation in the industry. As at that time, they acquired Marina International Bank, Commercial Bank Credit Lyonnais, so they were a very key participant in that wave. In the second wave which happened between 2011, they were also a big beneficiary bank. So what I’m saying is that broadly speaking, there are banks that have perfected the act of growing organically and there are banks that have also perfected the act of growing inorganically. Nothing precludes one, and none is mutually exclusive.
What does it mean for the industry? I think it is very good. I think for the size of our economy, we actually require bigger banks. Like I said, there is no Nigerian bank in the top 10 banks in Africa whereas Nigeria is the largest economy. So it is kind of counter intuitive and that scenario is wrong. The top four banks in Africa are South African and that speaks to the strength of South African banks. If our economy is bigger than that of South Africa, naturally you would expect that we should have bigger banks and even if not bigger, but to become comparable in terms of size to those banks. I think we are on a journey it is an industry that would continue to see growth from my perspective. Like I said earlier, people can choose a path on how to grow and all they can also choose both.
But with this development, do you foresee FirstBank also adopting an inorganic growth strategy in the medium term, considering the intensive competition we expect to too in the industry?
As an institution, you always have the option of organic versus inorganic growth. Unlike two of the tier 1 banks that have never been involved in any M&A activity, we have a history in M&A. Also, a bigger part of our history is actually growing our businesses on our own. So what that says is that both capabilities are inherent in our DNA and are available to us. What we would do continuously as a management working under the guidance of our board is to re-evaluate our position. And to say what are the growth opportunity for us, either inorganic or organic growth.
What is the update on your African subsidiary, are they now profitable?
I’m happy to announce to you that we have fully recapitalised our subsidiary in Ghana. You would recall that in the course of 2017, the Bank of Ghana announced a significant increase in the minimum pay up capital for all banks operating in Ghana. I’m happy to inform you today that FirstBank Nigeria own 100 percent of FBN Ghana. We have fully recapitalised FBN Ghana and we are now fully compliant with the new minimum capitalisation. What we done with our subsidiary is that we have basically reposition all of them and they have moved from where I would call them net taker of resources, we have broken even and as we journey in 2019 we expect growth and an increasing contribution to the groups profitability.
Last year, you had expectations for your bank, were your economic projections and expectations for the bank met and how will you describe 2019?
You would recall that the Nigerian economy was recently in a recession and we came out of the recession in 2017 and what consistently the key operators have said is that the recovery remains fragile. However, we have recovered and we are recovering. When you look at the growth that has been recorded in the course of 2018 you sit back and say we could have done more but, if the growth was also not well orchestrated the way it has always been orchestrated, we could have also slipped back. So for me, I would give the economy a pass mark.
As we move into 2019, the expectations are that things may be a bit slow on the back of the elections and given the fact that naturally, key players, especially on the fiscal side of the economy, would be focussing on re-elections.
But post that, the projections that I have seen are all quite positive and they all speak to the fact that the expected growth should be higher than what we recorded in the course of 2018.
For FirstBank, we started a massive transformation program in 2017 and 2019 is the end of that strategic cycle. That plan is focused on transforming the entire business with the work stream focusing on the way we serve our customers and around innovation. There are projects around reigniting the passion of our people, there are projects around strengthening our technology platform and there are projects also around save guarding our assets which is essentially risks management. We are quite delighted from the progress we have made over the last two years and we believe that in the course of 2019, we would have accomplished all the critical components 2017-2019 strategic agenda. We are also looking forward to 2019 because with what we are doing; we have basically built a new foundation to enable our bank to run more as digital bank rather than a branch led institution. Today, based on what we are doing, more than 80 per cent of our customer-initiated transactions are actually carried out on alternative channels.
That means, 80 per cent of our transactions happen on Firstonline which is done online, Firstmobile which is done with your mobile phones and USSD which is done on both smart and basic phone. That for us is our star product because today we are the clear leader in that segment of the economy. We currently have almost 6.3 million customers processing transactions on our USSD platform. If you look at Firstmobile, we are a very close to number two, with over 2.5 million of our customers processing transactions. We process very close to 25 per cent of the industry volume in terms of transactions. We are quite delighted with what we have achieved so far. We are basically building the foundation and we believe our next cycle would be around significant growth on the back of the fact that we have fixed the foundation and we trust the foundation that we have built that it would enable to grow rapidly and we are going into 2019 with that highly optimistic mode.
You predicted growth for the economy in 2019, with the recent interest rate hike in the US, don’t you think this would affect Nigeria’s growth trajectory next year?
You need to sit back and look at the impact of the US on the global economy. The reality of it is that because of the size of the US economy and also because for all practical intent, a chunk of global trade is denominated in the US dollars. So, whatever happens in the US economy because it has a vibrating impact across the entire world, affects other economies. So when US interest rates go up, it does have an impact on everybody. Don’t forget that whether as a country or as a financial institution, we all are going into the international capital market to borrow money. So when interest rates go up, the implication is that when you want to tap that market again, you have to go at a higher rate. Because the question the investors would always ask is why they would want to take emerging market risks when they can also get a decent return within their own economy.
The simple answer is that it would impact economies that are US-dependent, Nigeria being a key one. But globally, any action or inaction in the US has a significant impact because of the size of the US economy on the global space.
One issue manufacturers and some businesses complained about in 2018 is the tight Monetary Policy Rate (MPR), how did that impact on your operations during the year?
The Central Bank of Nigeria (CBN) Monetary Policy Rate stance has always been tight. So what I would say is that it was not unexpected. If you look at the major pronouncement of the Monetary Policy Committee (MPC) throughout the year actually retained for the most part all the key MPC matrices. So it is something we have all been dealing with and would continue to deal with. But you need to also understand the contest which the CBN has adopted those measure and that is also equally very important.
Firstbank is the cashcow of FBN Holdings. What are you doing in terms of risk management as well as to ensure you deliver maximum returns to shareholders?
I alluded to it when I spoke about the projects and all the transformation work we are doing. You are right; Firstbank is a big entity within FBN Holdings and the largest. Part of the work stream I earlier mentioned is one that focuses on safeguarding our assets. We have done a lot of work around our risk management. For example, when we started this journey about three years ago, we recruited a new Chief Risk Officer (CRO), we revamped the credit risk system, we have implemented a new risk management solution and in fact we have also implemented one now that has reached a very advanced stage. And what you see if you have been monitoring the NPL ratio for FBN holdings, of which FirstBank is substantial contributor to that, you would see that it is a dropped materially. We still have some wave but we are quite optimistic that by the time we are wrapping up our current strategic cycle by December 2019, we would be single digit which is quite significant.
What are some of the initiatives taken by the bank to drive financial inclusion, especially in the area agency banking?
Agency banking is one of the most successful initiatives we have introduced over the last 12- 18 months. Indeed, over the last year, we now have close to 12,000 agents across the entire network. Our agents are present in all local government in Nigeria except for one or two local governments. And what means is that when you layer that over 700 operating branches and we also have the largest distribution and network of ATM of about close to 3000. So that makes FirstBank a bank with the largest distribution network as far as financial services is concerned and that is quite significant. With the kind of foundation, we have built; we are confident that we have built a solid foundation upon which we can now rapidly grow our business. And that was speaking to the distribution network and to the revamped risk management system within our institution.
Looking at the retail business space, what is FirstBank going to do differently in 2019, to ensure you remain one of the leaders in that segment of the market?
Remember my response to the issue of agency banking. Agency banking is actually targeted at the unbanked and the people at the base of the pyramid. Our star product; USSD banking I referred to where I currently said we have customers in the excess of 6.2 million is also targeted at people at that level. So a combination of our agency banking and it is still growing. I mentioned that we currently have about 12,000 agents and we do have a growth projection around that but equally important is the fact that our USSD continues to grow. The reason why we have been quite successful with that is that you don’t need to have an expensive phone to be able to transact. Once you have a basic phone and you are able to send an SMS then that automatically becomes a tool to which you can transact. So a combination of growing our agent network and our very solid and rapidly growing USSD banking for us remains the winning formula in ensuring we have more people at the bottom base of the pyramid.
Don’t also forget that we operate from over 700 branches and our mobile banking called Firstmobile is actually the second in the industry today and we would continue to also focus on that and that is focused more on the middle income earner.
Sustainability banking is one the areas the CBN is asking banks to embed, what are you doing in this area?
FirstBank is committed to Global Sustainability as it is an area we have been very active in over the years. For many years, we partnered with Lagos Business School on its Sustainability centre. In addition to this, we are a member of The United Nations Disarmament Commission (UNDC). Internally as a bank, we have the right policies, the right framework and when we are going into projects that we believe would fall into sustainability; there are certain things that we look out for as part of our transactions or credit review. For example, when we look at a credit, we look at the environmental impact and analysis. We would now often ask questions on how projects would impact on the environment; if it would result in flooding or displacing people and what plans do you have to ensure that the environment is not destroyed or degraded on the back the project you are doing. So it is a critical part of what we watch out for.
There is a perception about Firstbank as not appealing to the younger generation, what are you doing to do to attract a younger generation?
That used to be the case some three to five years ago. I don’t have the statistics readily available now, but I would tell you that even from an internal perspective, more than 75 per cent of our workforce is less than 40 years. So that is a very young workforce. In the course of 2018 alone, and no other bank has done anything near that, FirstBank recruited 700 fresh graduates to join our workforce. Mind you, the maximum entry age is 27 so that gives you an idea of what you have done. And as I am speaking with you; we have advertised that we want to bring in younger people. So we are carrying out massive refreshment of talent and injecting a lot of young people at the base of our institution. If you also look at our customer profile within the retail statistics, I also know that between the age of 18 to 45 that is the age bracket between which the majority of our customers are. It is a perception issue that we have been working on and perception takes a while before you can completely change. So whether you are looking at our staffing or our retail base, we are actually indeed a very youthful bank.
Do you think the budget proposal presented can drive growth?
Yes.
What is your outlook for 2019, and what message do you have for customers of Firstbank?
We are quite optimistic about 2019 despite the fact that there is an expectation of a slowdown in the first half of the year on the back of elections. I did mention that GDP growth expectation based on IMF predictions is actually better than 2018.
For us at FirstBank, 2019 is also a very significant year for us. By March next year, our bank would be 125 years old and that is quite significant. We are by far the oldest financial institution in Nigeria and in the entire West Africa. But we are old in terms of age and if we have a large chunk of our customers that are youths. So we are old in terms of age but very youthful in terms of operations.
You would also notice that in the course of 2018 we launched our financial laboratory which we call First Digital laboratory whose essence is to do research for our new products and innovations. For example, today we are the only bank doing Whatsapp Banking. So this is an institution that is old but in terms innovation, culture it is youthful.
To our teaming customers, FirstBank has always been there, we would continue to be there for them and more importantly, we intend to take our game to the next level in terms of innovation, quality of customer service, in terms of our ability to provide customer with necessary support to grow their business.
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Sahara weekly online is published by First Sahara weekly international. contact [email protected]
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NEW BPP DG COMMITS TO EFFICIENCY AND STAFF WELFARE FOR IMPACTFUL SERVICE DELIVERY
Published
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November 21, 2024NEW BPP DG COMMITS TO EFFICIENCY AND STAFF WELFARE FOR IMPACTFUL SERVICE DELIVERY*
*_…begins review of bureau processes to enhance government procurement systems_*
The Director General of the Bureau of Public Procurement (BPP), Dr Adebowale Adedokun, has outlined his vision to drive efficiency, enhance staff welfare, and reinforce the Bureau’s regulatory mandate in alignment with President Bola Ahmed Tinubu’s renewed hope mandate and his commitment to improving Nigeria’s economy. This was made known during an interactive session with staff of the Bureau at the State House Banquet Hall on November 20, 2024. Dr Adedokun emphasised the urgency of delivering results as well as improving trust in the government procurement system to support President Bola Tinubu’s Renewed Hope Agenda, declaring, “Let us work together to get value for money for Nigeria’s developmental processes and achieve President Tinubu’s mandate of making Nigeria’s economy better.”
Furthermore, in a bid to strengthen operational efficiency, the DG also announced key reforms, including introducing Service Level Agreements for the bureau’s processes ensuring that letters are treated within 3 (three) days, and ensuring reports are completed within 14 (fourteen) days. He also highlighted plans to secure a sustainable budget that would improve the working environment and provide better welfare for staff.
Dr Adedokun firmly stated the Bureau’s resolve to uphold its regulatory integrity under his watch. He warned that officers are prohibited from visiting Ministries, Departments, and Agencies (MDAs) unless on official assignments stressing the need for officers of the Bureau to stay above board. He further declared that contractors are no longer allowed within the Bureau’s premises to ensure that officers can perform their duties without undue interference and influence.
Calling for a collaborative approach, the DG urged staff to embody the Bureau’s regulatory values by adhering to procurement guidelines, avoiding delays, and striving for excellence. “As a regulator, you must be seen to be guided by the procurement process,” he stated. He assured the team of an open-door policy, encouraging innovative ideas that could propel the Bureau to greater heights.
The session also featured a visit from former DG, Engr. Emeka Ezeh, OFR, FNSE, who led the Bureau from 2009 to 2016. Engr. Ezeh commended President Tinubu for appointing Dr Adedokun and urged staff to provide their full support to the new leadership. He encouraged staff to focus on leaving a legacy of excellence, saying, “Work in a way that you will be celebrated wherever you go in life.”
Senior Directors, including Engr. Nasir Bello and Engr. Isaiah Yesufu reiterated the importance of supporting the DG’s vision while emphasizing adherence to the Bureau’s operational guidelines. Staff also welcomed the session, sharing their perspectives on improving the Bureau’s operations and pledging their support for the new leadership.
In a related development, Dr Adedokun sought collaboration with the Presidential Office of Digital Engagement and Strategy (PODES) led by its Head, Mr O’tega Ogra, who is also the Senior Special Assistant to the President on Digital/New Media, during a courtesy visit to his office on November 21, 2024. The DG emphasized the need to enhance the Bureau’s public engagement and visibility in line with the all-of-government communications approach being espoused by the PODES.
Mr Ogra congratulated Dr Adedokun on his appointment and highlighted the key role BPP plays in advancing Nigeria’s development agenda. O’tega further expressed his commitment to collaborating with the Bureau in amplifying its communication efforts and ensuring Nigerians understand and appreciate its critical role in national governance.
Dr Adedokun’s leadership marks a new chapter for the Bureau of Public Procurement, focused on accountability, efficiency, and impactful service delivery. His vision aligns seamlessly with the Federal Government’s goals of economic transformation and sustainable development as well as President Bola Tinubu’s renewed hope agenda.
Janet McDickson
Director, Information & Public Relations/Head, Media-BPP
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Abducted Rivers bizman rescued, suspected robber arrested
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November 21, 2024Abducted Rivers bizman rescued, suspected robber arrested
The Rivers State Police Command said its men rescued a businessman identified as Julius Madabuchi, who was kidnapped by a four-man gang at a filling station in the Oyigbo Local Government Area of the state.
The police said the man was abducted when the miscreants who were driving in a Black Toyota car stormed the area and started shooting discriminately before executing their plan.
The rescue of the man, the police said, followed a distress call sent to the command control room about the activities of the hoodlums on November 17 and immediately mobilised operatives to the scene, saying the abductors engaged the police in a shootout.
The spokesperson for the state police command, Grace Iringe-Koko, disclosed this in a statement issued in Port Harcourt, Rivers State capital, on Wednesday.
The statement reads, “On the 17th of November, 2014, at about 2023hrs, operatives of the command received a distress call from the Room indicating that a gang of armed men numbering about four operating in a Black colour Toyota Corolla car shot sporadically and kidnapped one Madabuchi Julius at Sabbath Filling Station, Oyigbo.
“Operatives were swiftly mobilised to the scene and the hoodlums on sighting the police operatives drove off, but they were given a hot chase by the operatives and subsequently intercepted along Egbu Street, Oyigbo and a gun duel ensued between the operatives and the hoodlums.
“The hoodlums could not withstand the police’s superior firepower and eventually abandoned the victim and their operational vehicle with registration number RIVERS PHC 938 AH and escaped. The victim was rescued unhurt and the vehicle recovered. He has since reunited with his family.”
The state police image maker however said an investigation is ongoing while concerted efforts are being intensified to apprehend other fleeing members of the gang and recover their operational weapons.
In a related development, Iringe-Koko said the following day, precisely on Monday, operatives of the command acted on credible information, coordinated a covert operation at the St Lorinta Street, Oyigbo and arrested one Gabriel Morris, aged 25, at Mercy Ground in Kom-Kom, Oyigbo LGA of the State.
The state police spokesperson stated, “During interrogation, the suspect confessed to being a member of a syndicate that had been terrorising Oyigbo and its environs in recent times.
Iringe-Koko, a Superintendent of Police, listed items recovered from the suspect including one locally made pistol and a quantity of weeds suspected to be Indian hemp.
She added, “Investigation is ongoing, while concerted efforts are intensified to apprehend other fleeing members of the syndicate.
“This successful operation further demonstrates the effectiveness of the Rivers State Police Command in combating kidnapping and all other forms of crime in the state.”
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Celebrate Your Wins, No Matter How Small-Prudent Ludidi
Published
2 days agoon
November 20, 2024“Celebrate Your Wins, No Matter How Small-Prudent Ludidi
Today, I want to talk about something incredibly important, yet often overlooked: celebrating our wins. Yes, you heard that right – celebrating our wins, no matter how small.
We live in a world that constantly pushes us to achieve more, be more, and do more. We’re always striving for the next goal, the next milestone, the next achievement. And while ambition is great, it’s equally important to acknowledge and celebrate the small victories along the way.
Think about it. How often do you achieve something amazing, only to dismiss it as “not a big deal” or “just part of your job”? How often do you downplay your successes or attribute them to luck rather than your hard work and dedication?
Here’s the thing: every win, no matter how small, is worth celebrating. Every achievement, no matter how insignificant it may seem, is a testament to your strength, resilience, and determination.
Celebrating your wins does several things. Firstly, it boosts your confidence and self-esteem. When you acknowledge your achievements, you remind yourself of your capabilities and potential.
Secondly, celebrating your wins helps you stay motivated and focused. By recognizing your progress, you’re more likely to stay committed to your goals and keep pushing forward.
Thirdly, celebrating your wins fosters a positive mindset. When you focus on what you’ve achieved, rather than dwelling on what’s still to be done, you cultivate gratitude, happiness, and contentment.
So, how can you start celebrating your wins?
Start small. Write down three things you’ve accomplished each day before bed. Share your achievements with a friend or family member. Treat yourself to something special.
Celebrate the tiny victories: finishing a difficult project, trying a new recipe, or simply making it through a tough day.
Celebrate the milestones: landing a new job, running a marathon, or graduating from college.
And celebrate the moments in between: learning a new skill, making a new connection, or taking a much-needed break.
Remember, celebrating your wins isn’t about being arrogant or boastful. It’s about acknowledging your hard work and dedication. It’s about recognizing your worth and value.
Don’t wait until you’ve achieved something “big” to celebrate. Celebrate every win, no matter how small. Celebrate every achievement, no matter how insignificant it may seem.
You are worthy of recognition. You are worthy of celebration. And you are worthy of acknowledging your own strength and resilience!
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