First Bank Predicts 10% Decline in Loan Growth

First Bank of Nigeria Holdings Plc, owner of First Bank Nigeria Limited Thursday forecasts slower loan growth of 10 per cent for this year due to the new monetary policy regulation.

The Central Bank of Nigeria (CBN) had at its last monetary policy committee meeting raised the Cash Reserve Requirement (CRR) for public sector funds to 50 per cent, warning about the risk of excess liquidity in the banking industry. The central bank had also directed lenders to lower fees and commissions starting from April 1 to reduce conflict with clients.

First Bank Holdings’ loans declined by 1.2 per cent in its first-half financial statement this year due to cut in retail credit and exposure to downstream oil and gas industries, Bloomberg quoted the financial institution’s Chief Financial Officer, Mr. Bayo Adelabu, to have said in an investors’ conference call.

“We’ll target power, manufacturing and telecommunications sectors for lending in the second half, and do more investment banking to mitigate the impact of regulatory rules,” Adelabu said.

First Bank’s net income for the first-half was little changed at N46.1 billion from N45.3 billion a year earlier. Its revenue increased by eight per cent to N194.9 billion while interest expenses climbed 32 per cent to N38 billion.  Also, impairment charges for loan losses rose nine per cent to N10 billion.

The Lagos-based lender plans to increase its revenue as much as 15 per cent in 2013, down from 31 per cent in 2012, according to Adelabu.
First Bank’s share price dropped by 2.6 percent to N15.75 on the Nigerian Stock Exchange (NSE) Thursday.

August 30, 2013