By Christopher Nnanta InvestAdvocate

Lagos (INVESTADVOCATE)-First Bank of Nigeria Plc (FBN) Tuesday announced an increase in Profit After Tax (PAT) by 53.46 percent (53.46%) in its 2011 Audited Year End.

From the Result Announcement released to the Nigerian Stock Exchange (NSE) and made available to www.investadvocateng.com in Lagos Nigeria, the Bank posted a PAT of N44.785 billion in year 2011 compared to N29.177 billion in year 2010 end; indicating an increase of 53.46% in the review period.

The Bank also announced a dividend of 80 Kobo per share to its investors in the Audited Period Ended December 31 2011.

A further review of the 2011 Year End Result; shows that First Bank posted a Profit Before Tax (PBT) of N50.066 billion compared to N33.767 billion in year 2010 end; showing a growth of 48%.

Gross Earnings also grew from N232.079 billion in year 2010 end compared with N298.329 billion in the review period of year 2011; indicating a growth of 28%.

In a Statement from the Bank made available to www.investadvocateng.com by Aderemi Edwards-Adebiyi of the Corporate Communications of First Bank, Bisi Onasanya, its Group Managing Director (GMD) said they have made significant progress in achieving their strategic goal of being the number one financial services group in Nigeria.

“Our results are reflective of the benefits being reaped from the implementation of our transformation agenda which has improved customer focus, acquisition, satisfaction, business generation and enhanced the sustainability of our earnings base. This has brought about considerable improvements in our interest and non-interest earnings generation capabilities, margin expansion, operational efficiency as well as reduced funding costs. Testament to this is the decline in our cost to income ratio by over 10 percentage points to 56.8%.

During 2011, we opened a representative office in the United Arab Emirates and acquired the Banque Internationale de Crédit of Democratic republic of Congo – one of the most profitable banks in the region.

We remain focused on enhancing shareholder returns by continuing to drive efficiencies and synergies to our current operations, leveraging opportunities across the Group as well as assessing new avenues of growth.” he said.

In reviewing the business of the Bank, Onasanya said the approach to driving their performance remains two pronged; controlling costs and driving top line growth. “We have grown net interest income by 51% to

N183 billion on the back of improved asset pricing as well as generally optimising balance sheet efficiency. Overall, we were able to increase the yield on our earning assets and loan book by 120 basis points and 330 basis points respectively. This, in conjunction with lower funding costs, led to expansion in our net interest margins to 8% from 6.1% in 2010” he said.

According to him, Total operating expenses rose 23.5% to N147 billion from N119.3 in 2010; adjusting for one-off increases in staff costs and the recently introduced AMCON resolution cost charge, underlying growth in operating expenses came in significantly below inflation rate at 8.0%.

Onasanya affirmed that the impact of the AMCON resolution cost of 0.3% of total assets was a N5.9 billion charge to the Bank’s profits.

“We recognised total provision for losses of N44.8 billion made up of N32.9 billion in provision for credit losses, N8.3 billion in provisions made with respect to diminution in value of equity and fixed income securities and N3.7 billion as provision for other losses” the First Bank GMD said.

He further affirmed that the provisions for credit losses of N32.9 billion were largely related to delinquencies that occurred in the course of the financial year and the Bank’s deliberate decision to continue to take prudent positions on the loan portfolio in line with its risk management practices benchmarked to international standards. “The diminution in value of equity and fixed income securities is made up of N6.1 billion and N2.2 billion in mark to market losses on the fixed income and equity positions respectively” he said.

“We took an exceptional charge of N15.5 billion during the year. This was driven by haircut in respect of sales of eligible bank assets to AMCON worth N176.3 billion, with a net value of N148.8 billion, in exchange for bonds worth N189.4 billion with a discounted value of N133.3 billion.

Included in the sale to AMCON was our $586.1 million (N99 billion) loan exposure to Seawolf Oilfield Services which, though performing, was deemed a systemically important loan by the regulatory authorities. This sale was executed at an 11% discount to par, which resulted in an N11 billion charge to our profit. The balance of N4.5 billion represents the haircut on non-performing loans sold to AMCON” Onasanya affirmed.

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