First Bank Cancels Bid for Fresh Capital




First Bank has cancelled previous arraignments for fresh capital into the bank as it said last weekend it had no need to raise fresh capital and that it was unlikely to go ahead with a previously-planned bond issue. Reuters quoted the Chief Risk Officer of the bank, Remi Odunlami, as saying at a conference call, “It is unlikely that we are going ahead with the raising.” 


First Bank had said last November it planned to use a N500 billion bond to help fund acquisitions both in Nigeria and abroad. The bank also said it was in talks with the Johannesburg stock exchange about a possible secondary listing and would hold a meeting to discuss the plans in South Africa next week (this week). First Bank executives also disclosed that the bank was aiming for loan growth of 10-15 per cent during 2010 and was hopeful of achieving an 18 per cent return on equity, the top end of its earlier target range. 


According to the bank, the listing is aimed at increasing liquidity for investors, not to raise capital, First Bank had for the half year ended June 30, 2010 reported a profit before tax of N31.7 billion, raising investors’ hopes of faster return of good earnings in the sector. Similarly, profit after tax rose N3.4 billion to N25.3 billion in 2010.Commenting on the performance, the Group Managing Director of the bank, Bisi Onasanya, said: “We are pleased to record a strong rise in profitability in the first half compared with a difficult 2009. We were early in recognising the impact on credit quality of the global financial crisis, which now flows through into the bottom line in lower new provisions. 


“We have also made continued progress in gathering reliable, long-term deposits as Nigerian customers reassess their banking arrangements in the wake of the turbulence in the banking sector.This has left us with further scope to increase lending to the real sector of the economy.” According to him,  the bank expect that  increased demand for debt financing will see it grow its asset base in the second half, adding that the  main challenge lies in the bank’s ability to thrive in a low interest rate regime.





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