Bank Aspirations

FirstBank of Nigeria engaged in a strategic planning exercise in 2008 in which three-year aspirations were set for 2011, with the overarching objective of enabling the Bank to achieve its vision of becoming in every manner 'the clear leader and Nigeria's bank of First choice'.

Our targets can be broadly broken down into (i) Scale (assets) (ii) Profitability/capital efficiency (ROA, ROE, cost-to-income) (iii) Asset quality (NPLs) and (iv) Service level metrics.

1. Scale: With respect to scale, the Bank continues to grow at a healthy pace organically and, as at YE2009, the bank had an estimated 13% market share of assets. The Bank views inorganic growth as a viable and appropriate growth route, where a suitable combination and terms can be found. We continue to explore various options. While recent regulatory statements imply that certain limits may be placed upon the relative size of banks, we believe that FirstBank should aspire towards a 20% market share domestically.
2. Profitability/capital efficiency: FirstBank continues to strive towards its profitability and capital efficiency targets. Having already achieved its (pre-exceptional provisioning) ROA goal, the Bank has resolutely set its sights on new ROE and cost/income targets. With a marginally depressed ROE post-equity offer in 2007, FirstBank is judiciously working towards boosting ROE by improving its leverage (with a strong emphasis on low-cost current and savings deposit mobilisation) and enhancing its share of fee and commission income. While cost-cutting initiatives are ongoing, FirstBank envisages that major cost-to-income ratio improvements will come from the income side of the equation – by improving its share of fee/commission income, optimising its liquidity position (i.e., strongly incentivising growth in the loan book versus liquid assets in the near-time), and increasing its yield on earning assets.
3. Asset quality: In line with the industry, FirstBank experienced an increase in its non-performing loan ratio due to the general slowdown in economic growth and direct or indirect exposure to sectors affected by the 2008–2009 decline in oil prices and the domestic equity markets. The Bank made aggressive provisions and write-downs in 2009 in line with prudential guidelines and expects that the overall asset portfolio quality will improve shortly, all else being equal. As the Bank extends its franchise further in the middle-market corporate (commercial) and consumer lending space, risk management systems and processes will be strengthened to optimise portfolio quality and to ensure that margins reflect and adequately compensate for risk.
4. Service levels: A major emphasis, and perhaps the greatest priority of the Bank, will be improving service delivery. The Bank is yet to break into the top quartile of Nigerian banks with respect to service levels, based on independent industry surveys, but has instituted major initiatives to address this lapse. Long reputed for very high transaction volumes (driven in part by its very large massmarket franchise), FirstBank will increasingly strive to improve overall service delivery quality. Furthermore, the Bank will institute incentives to aggressively move routine transactions to alternative channels and simultaneously ensure that premium customers (e.g., corporates, high net-worth customers) receive first-class service. Further elaboration on the Bank's service delivery model can be found in the section below.