First Bank Shares In Biggest Fall Amidst Board Shake-up, Profit Drop

FBN Holdings woes were compounded as the release of its first quarter earnings report showed a 39 per cent profit drop.
FBN Holdings PLC, the parent company of Nigeria’s oldest lender First Bank of Nigeria Limited, saw its share price fall by 6.76 per cent at Thursday’s trading session in Lagos, the sharpest plunge since December 10, as the bank faced a stringent regulatory action by the Central Bank of Nigeria.

The 125-year old bank rankled industry watchdog CBN on Wednesday, when the Ibukun Awosika-led board announced the appointment of Gbenga Shobo, its deputy managing director, as its managing director/chief executive officer, saying Adesola Adeduntan, its CEO, had retired.

The apex bank reacted through a letter to Mrs Awosika, saying no consultations were made with regulatory authorities before the corporate decision was reached, given the systematic importance of First Bank as Nigeria’s fourth-biggest bank.

On Thursday, Governor Godwin Emefiele announced the removal of the boards of FBN Holdings and First Bank, and the reinstatement of Mr Adeduntan, who was due to retire in December.

Mr Emefiele said the bank had for years been plagued by “bad credit decisions, significant and non-performing insider loans and poor corporate governance practices”.

“We will not allow a shareholder who feels he will not subject himself to regulatory control and authority to remain as a director of the bank,” said the CBN head.

The regulator said it has since 2016 helped First Bank regain a firm footing after the lender had heaped up an avalanche of bad loans that threatened its survival.

Adesola Adeduntan, managing director First Bank.
Adesola Adeduntan, managing director First Bank.
During this time, the ratio of FirstBank’s non-performing loans to total credit fell to 7.7 per cent in 2020 from over 20 per cent two years earlier, coming after a restructuring and write-offs of corporate debts.

The maelstrom generated by controversy led investors to dump huge volumes of FBN Holdings for sale on Thursday, with 51.524 million of its shares traded.

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The bank’s share price saw its biggest slump since about the start of the year, and it is probable it will fall further in the days ahead, considering that the incident could degenerate into a tailspin.

FBN Holdings woes were compounded on Thursday as the release of its first quarter earnings report showed that profit after tax crumbled by N10 billion or 39 per cent to N15.600 billion, as its interest income shrank significantly January through March.

The bank set aside N13.2 billion to cover loans that may potentially be impaired, more than one third higher than the N9.8 billion committed to that purpose in the same period of 2020.

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