FBN Holdings, in a deal which became effective on June 1, 2020, transferred ownership of FBN Insurance Limited to Sanlam Emerging Markets (Proprietary) Limited. Before the transaction, the Nigerian firm controlled 65 per cent equity in the insurer, while Sanlam had the other 35 per cent share.
According to FBN Holdings Chief Executive Officer, Mr Kalu Eke, the group wanted to focus on improving shareholder value following the divestment from FBN Insurance.
The FBN Holdings Chief explained that it was done in line with the group’s medium to long term strategic objectives.
He added that it also boosted the capital position of its commercial banking unit, First Bank of Nigeria Limited, to 16.53 per cent as of June, higher than the regulatory minimum is 15 per cent for local lenders with international licences.
This is coming at a crucial time as profit after tax rose to 56.3 per cent to N49.5 billion from N31.6 billion in the same period last year while its earnings went up by 5.8 per cent to N296.4 billion compared to N280.3 billion in the comparative period, according to its interim financial reports.
Speaking on this, Mr Eke said, “The 56.3 per cent year-on-year growth in profit after tax for the period is a testament to the strength of our organisation to continually deliver exceptional services to our customers in these unprecedented times.
“We have been able to achieve this feat by leveraging our agent banking network, innovative e-banking capabilities, and operational efficiency utilizing technology.
“During the quarter, we successfully divested from the underwriting (insurance) businesses to focus on our banking operations. We are confident this will enhance greater value to our stakeholders and strengthen the Group’s resolve to consolidate its leadership of the banking sector.
“Following the divestment, FBN Holdings injected Tier 1 capital into FirstBank, effectively increasing its CAR to 16.5 per cent. This provides a comfortable buffer against regulatory requirements with the potential to support any emerging business opportunities.
“Looking ahead, we remain cautious, but we are confident that our business is fundamentally strong to withstand any future challenge towards enhanced performance”.
Nigeria’s banks are expected to take a big hit to revenues and face rising borrowing costs this year as the Central Bank of Nigeria (CBN) measures to support the naira squeeze lenders already hit by fallout from the coronavirus and the oil price crisis, which affected foreign reserves.
