FirstInland Bank’s post-offer performance: A holistic perspective
Lanye Oyetade, Lagos
Okey Nwosu, MD, FirstInland Bank
With proceeds from its just concluded public offering, massive
investment in small businesses up country in a growing economy, branch expansion and international presence, shareholders of First Inland Bank Plc should expect a bumper harvest in the years ahead, according to expert opinion.
Having successfully weathered the storm of the regulatory-induced consolidation in the banking sector, FirstInland Bank has continued to grow from strength to strength.
In a bid to sustain its impressive growth and enhance shareholders value, the bank recently accessed the capital market to raise about N100billion fresh funds.
Following the conclusion of the fund raising exercise, and steps put in place before the offer, there are indications that shareholders of the bank will continue to reap bumper returns from their investments.
The high expectations are hinged on the strategies put in place by the bank to actively participate in the economy that has sound growth outlook as released by the Central Bank of Nigeria (CBN). The investment inflow following Nigeria’s strong external reserve and a good sentiment about the Nigerian stock market are also expected to influence the fortunes of the bank.
The Nigerian economy has been performing very strongly in the wake of recent economic policies initiated by the Federal Government. This development has seen the non-oil sector recording very tremendous growth amidst other macro-economic indices.
For instance in 2006, the CBN reported a Gross Domestic Product (GDP) of N18.2 trillion and projected about N19 trillion in 2007.
In the same vein, the apex bank has projected external reserves of about $50 billion for 2007 while prices of crude of oil, the country’s major foreign exchange, is rising in the international oil market.
Besides this, Nigeria has maintained a BB- sovereign rating by Fitch, and Standard and Poor, two leading international rating agencies. This level of rating means that Nigeria is a country with reasonable stability that an investor can invest in.
Moreover, Goldman Sachs, a leading international investment bank, has said in a recent report that Nigeria would be one of the 20 biggest economies in the world by 2020 if its on-going economic reforms were maintained.
Against this background, the CBN has initiated Financial System Strategy 2020 (FSS) aimed at positioning the economy as the hub of the African continent as part of the strategy to position Nigeria as one of the biggest economies in the world by 2020.
Consequently, this positive economic outlook has increased the confidence and interest of local and international investors in the Nigerian economy.
In a bid to position themselves for the emerging economic opportunities, some of the discerning banks among the 25 banks that emerged from the recent consolidation in the banking industry have begun to shore up their tier one capital in order to remain locally and globally competitive.
It is against this background that First Inland Bank Plc joined the rank of banks raising fresh funds from the capital market to expand and modernise its operations as well as boost its working capital requirement.
The bank offered for subscription five billion ordinary shares of 50 kobo each at N9.50 per share, rights issue of 968.8 million ordinary shares of 50 each at N8.50 per share and four billion irredeemable non-cumulative preference shares of 50 kobo each at N9.50 per share.
The current share price of the bank on the Nigerian Stock Exchange (NSE) is N13.30. This means that it gave a discount of 28.6 per cent on the Public Offer and 36.09 per cent on the Rights Issue.
Financial performance
For the financial year ending April 30, 2007, First Inland Bank reported gross earnings of N27.5 billion and profit after tax of N2.6 billion compared with gross earnings of N2.98 billion and a loss after tax of N10.3 billion in 2006.
Coming on the heels of this performance, the directors of the bank have projected that in the absence of unforeseen contingencies, the bank’s gross earnings would increase to N50.015 billion for the financial year ending April 30, 2008 while profit after tax would be N8.9 billion. The Board of the bank has projected a dividend of 31 kobo for the 2009 trading period.
Strategic positioning
First Inland Bank has set a vision of being "first and distinctive in all aspects of its operations". To facilitate this vision, it has set out a five-year strategic plan of expanding its operations in Nigeria and abroad in a bid to actualise the vision.
The bank plans to pursue projects that will enhance its reach to potential customers in various geographical locations across the globe by investing in various channels including branch expansion projects and information technology infrastructure.
It will also enhance its working capital to enable it consummate big-ticket transactions in some identified profitable sectors of its target markets.
In order to realise this objective, First Inland Bank plans to enhance its capacity in human resources, risk management and information and communication technology.
Technology and products
One of the major strengths of First Inland Bank is technology and technology-related products. Information technology remains the platform of First Inland Bank’s service delivery. The bank’s strategy involves the continued use of technology to reshape banking service delivery in Nigeria in order to ensure convenience, efficiency, cost reduction, value added and innovation. The bank continues to exploit and master new technologies to package and deliver innovative products and services. First Inland continues to take pride as a technology and service driven bank as we strife to increase and enhance the service delivery channel using technology.
Retail banking
Its retail banking products and services are aimed at promoting lower risk retail lending products, in particular car loans, credit cards, and other consumer finance related products. The bank targets the low class customer segment, which is currently under-banked and is set to grow rapidly during the next few years as the economy continues to expand.
Our products are distinct in five major functional aspects: access, type, pricing, service and marketing.
The bank has various products targeted at customer’s stage of life; young adult, marriage and household formation, childbearing and education, household saving, retirement saving and actual retirement for best results. Our operations are seamlessly integrated so that customers experience the same level of efficient service, whether online, offline, ATM and mobile phone or in our branches, the Managing Director, Okey Nwosu, said recently.
Private banking
Another area the bank is doing very well is private banking. Its services in this area are professional, innovative and flexible in responding to individual needs, utilizing an extensive range of investment, fiduciary and banking products. First Inland Private banking pursues an integrated business model to cater for the needs of high net worth clients, families and selected institutions.
It also provides a comprehensive offering of financial solutions including estate planning and advising on foundations and philanthropic activities.
Corporate banking
First Inland Bank has competence and expertise in the delivery of customized and unique solutions tailored to address our corporate customers’ distinctive needs.
It has enhanced its customers’ business, leveraging on industry links and thorough understanding of its operating environment. Its dedicated professionals have unique insights based on skill, experience and knowledge of the industries in which its clients operate.
Investment banking
The bank’s experienced professionals have the strength and industry experience to meet the needs of all categories of customers. Its investment banking division has a strong heritage in wholesome banking, coupled with strategic alliances with local and offshore financial institutions.
Structure finance
The bank has developed a wide range of appropriate financial solutions to meet its customers’ sophisticated requirements in structured financing, in collaboration with multilateral financial institutions such as Afrexim, IFC, FMO and US-EXIM.
Its structured finance team focuses on the design of debt, equity, and hybrid financing techniques, in order to meet financing goals that cannot be solved by conventional corporate finance or bank credit products.
First Inland Bank is the result of the merger in December 2005, of four banks, namely First Atlantic Bank Plc, Inland Bank (Nigeria) Plc, IMB International Bank Plc and NUB International Bank Limited.
The bank has played a leading role in a substantial number of transactions in telecommunications, oil and gas, hospitality and infrastructures development through its thriving partnership with top foreign and local financial institutions. The bank had among others secured a 100 per cent increase in its line of credit from the Africa Export-Import (Afreximbank), based in Cairo Egypt. These laudable developments signify the increasing and growing confidence in the Bank by the foreign institutions.
First Inland Bank continues to create more capacity efforts towards strengthening its offshore funding base with a host of other multilateral financial institutions.
The bank is strongly committed to the development of the Nigerian financial markets by accessing offshore lines of credit and making such available to its valued customers, which will significantly enhance the country’s economic growth, deepen credit creation, enable difficult deals to be structured and ensure a sophisticated and developed market.
The bank’s enhanced financial position provides it with the ability to handle large ticket transactions while offering more diversified services to customers.
It also has an enhanced scope for accessing international markets and participating in cross-border transactions.
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