One thousand members of Staff of First Bank of Nigeria will lose their jobs, FBN Holdings Plc, the mother body for Nigeria’s oldest and biggest bank, has said.
This job cut is coming on the wings of “very bad” 2015 earnings, which saw the bank’s profit slump by 82 percent to N15 billion.
Speaking to Bloomberg in Lagos, Adesola Adeduntan, chief executive officer of First Bank of Nigeria, said the bank expects to boost its return on equity (ROE) – a key measure of profitability – to between 11 percent and 14 percent in 2016 from 2015’s figure of 3 percent.
First Bank also revealed that it is also targeting a cost-to-income ratio of 55 percent in two years’ time from 59 percent.
“ROE will be much better than last year. At a minimum, we should triple it,” Adedutan told Bloomberg.
“We do not shy away from taking difficult decisions. We used to have above 8,000 people. We’ll push it down, gradually, to 7,000.”
The bank’s net profit fell from N86 billion in 2014 to N15 billion in 2015, following rising impairments on Nigeria’s economy, owing to falling crude oil prices.
Gross domestic product (GDP) growth decelerated to 2.8 percent in 2015 – the lowest level since 1999 – with the International Monetary Fund (IMF) projecting the economic growth to fall further in 2016 to 2.3 percent.
First Bank’s non-performing loans ratio stood at 22 percent at the end of March, compared with 3.8 percent a year earlier, with Adedutan saying the bank’s number one priority is reducing the figure.
“The bank will do that by reducing the proportion of its lending to the oil and gas sector, currently at about 39 percent of total loans, and focusing more on blue-chip companies in other industries,” he said.
According to Bloomberg, FBN’s shares rose 5.3 percent to 3.57 naira on Wednesday. They’re still down 30 percent this year – more than the Nigerian Stock Exchange All Share Index’s drop of 13 percent.