FBN Holdings Plc said it booked an operational loss of N64 billion in 2014 due to regulatory headwinds of the Central Bank of Nigeria (CBN).
The regulatory headwinds are measures introduced by CBN and the monetary policy committee to manage inflation and liquidity in the system.
Mr Bello Maccido, FBN Holdings Group Chief Executive Officer, said this during the company’s “Facts behind the figures” at the Nigerian Stock Exchange (NSE) in Lagos.
According to him, the company lost N64 billion to the increase in cash reserve requirement (CRR) for both public and private sector to 75 per cent and 20 per cent respectively by the apex bank.
Maccido said that the enforcement of treasury single account with 25 per cent of qualified public funds withdrawn monthly by the CBN contributed also to the banking group loss.
He said that monetary policy tightening through foreign exchange sales restrictions and closure of retail dutch auction sales (RDAS) window affected the company’s revenue generation.
The other challenging regulatory backdrop of the group in the period under review include the implementation of Basel 2 requirement in October 2014.
On the commencement of Basel 2, Maccido said that the company had no immediate plans to raise Tier 1 capital in the next 12 months due to low market liquidity.
He said that the company would not access the market for fresh funds due to depressed situation of the market and depressed valuation of its stock.
The chief executive officer said that weak market liquidity and experiences of some new issues that accessed the market in the recent times informed the company’s decision.
He said that the company’s capital was being enhanced through increased profit retention, reduced dividend pay out, interim capitalisation of profits, efficient balance sheet management and more conservative loan growth.
Maccido said that banks were expected to submit recapitalisation plans for Basel 2 by June with full recapitalisation required by June 30, 2016.
He said that the company’s capital adequacy ratio (CAR) of 16.7 per cent was above the regulatory threshold of 15 per cent, noting that the company would adhere strictly to the capital plan to transact big businesses.
“We have good capital position to continue operations and we have a very robust capital plan,” Maccido said.
On future outlook, he said that the company would enhance revenue generation, increase capital management strategy, maintain cost efficiency strategy and portfolio strategy to increase operational profit.
Maccido also said that the company would decrease term loans to short term self-liquidating trade transactions and ensure active monitoring of risk asset portfolio.
He added that the company would rationalise unprofitable branches and as well reduce branch expansion, noting that only critical and important branches would be rolled out.
Despite being hit massively by CBN measures, the company posted gross earnings of N480.6 billion for the financial year ended Dec. 31, 2014 against the N396.2 billion recorded in the comparative period of 2013.
Profit before tax stood at N92.9 billion compared with N91.3 billion in 2013, while profit after tax rose to N82.8 billion against N70.6 billion in 2013, an increase of 17.3 per cent.
The company declared a dividend of 10k per share and bonus of one for 10 to its shareholders in contrast to a dividend of N1.1 per share paid in 2013.