First Bank Holdings to focus on short-term financing

Nigeria’s FBN Holdings will focus on short-term trade financing to make up for slower growth in its loan book forecast to expand by four per cent this year, from 23 per cent last year, its chief executive officer, Mr. Bello Maccido, has said.

Maccido also said the top tier lender with over N2.2 trillion on its loan book will be conservative on loans this year after financing power and oil sector projects in 2014.

“In the past we would do term loans of two years but this year we would focus on trade finance,” Maccido told Reuters in a telephone interview.

“We are projecting modest loan growth of 4 percent. We expect to be conservative on loans … focusing on trade transactions that have typical 90-day cycles.”

Maccido said he expected FBN Holdings to generate a tenth of its revenues from its investment banking and insurance units combined by 2016, up from around 7 per cent now, after it acquired Kakawa Discount House and Oasis Insurance last year.

The commercial banking arm, First Bank Limited, with over 9.4 million customers in Africa’s biggest economy, accounts for around 93 per cent of revenues, Maccido said, adding that the group has applied for a merchant banking license.

FBN Holdings, with interest in lending, insurance and investments, last week reported growth in 2014 pre-tax profit of 1.7 per cent, driven by project and trade finance.

Shares in FBN Holdings, which have risen eight per cent this year, fell 0.1 per cent to N9.50 each on Monday. The stock fell 46 per cent last year.

Maccido said the bank holding company was trading at a discount of 0.6 times book value relative to peers, but expected a rally in its share price this year after a rule restricting pension funds from investing in holding companies was lifted.

FBN Holdings proposed to pay 0.10 naira cash dividend for 2014 with a bonus of one new share for every 10 held, Maccido said because the group planned to retain a greater proportion of its earnings to fund growth rather than raising fresh funds.

The firm paid out cash dividend of N1