FBN Holdings Improves Risk Management to Reduce NPLs

The Managing Director of FBN Holdings Plc, Mr. Urum Kalu Eke yesterday said the company was working hard to reduce its non-performing loan (NPL) ratio from the 26 per cent recorded in 2016 to below 20 per cent this year. Speaking at the company’s fact behind the figures presentation at the Nigerian Stock Exchange (NSE) in Lagos, Eke said the NPL ratio rose last year due to impairment charges of about N226 billion.

According to him, five major accounts constituted the company’s NPL, disclosing that one of the accounts would drop off by June 30, while the second major account would follow. He therefore, expressed high optimism that the five NPLs accounts would be resolved very soon.

“There are no fresh NPLs forming in our books, the books are clean and our focus on lending is now on manufacturing sector. Besides, we have reviewed our credit process and strengthened governance framework to ensure improvement in asset quality,” he said. According to him, the company recruited a new chief risk officer to drive the new credit architecture and build a robust and sustainable credit underwriting practice, noting that the company restructured credit terms of obligor with compelling business case to match cash flows.

Based on these strategies, the MD said the company’s NPL would be in single digit by 2019, while cost of risk would be less than two per cent.

Eke, therefore assured capital market operators and shareholders of enhanced dividend in the years ahead, noting that, the commercial banking arm had not contributed dividend to the holding company in the past two years. Eke said that the capacity of the holding company to distribute dividend would be enhanced by the time the commercial bank starts contributing dividend.

He explained that the decision of the commercial bank not contributing dividend to the group was strategic to enable the company to clean up its book.

Meanwhile, in his speech, the Chief Executive officer of NSE, Mr. Oscar Onyema, hailed FBN Holdings for using the facts behind the figures platform to engage the market on its strategic and operational development.

Onyema also commended the company for posting out strong fundamentals in spite of challenging operating environment witnessed in 2016 financial year.