On CNBC Africa’s closing bell Managing Director of First Bank Of Nigeria Plc Adesola Adeduntan shed more light on the bank’s $300 million subordinated bond which was redeemed yesterday ahead of maturity. The notes which were to mature in 2020.
He also discussed several issues pertaining to the bank.Here are excerpts from the interview.
Why is the bank recalling the bond?
The bank issued the note about five years ago, and had the option of recalling the instrument. The bank had signficant foreign currency liquidity that enabled the bank to pay off the bond, without having to issue a new one.
No impact on CAR and Liquidity ratios
The repayment has no impact on the bank’s Capital Adequacy Ratio as the bank had built up sufficient foreign currency reserves.
The Capital Adequacy Ratio, CAR, is a ratio of a bank’s qualified capital (equity) as a percentage of its total risk assets (money lent out by the bank).
In simple terms, the ratio measures a bank’s ability to shoulder loans should they go bad.
Liquidity ratio is the ratio of a bank’s liquid assets to its liabilities. In other words, a banks cash balance plus assets that it can easily convert to cash to the total liabilities owed by the bank, which is typically your deposits.
In Nigeria’s banks are supposed to have a liquidity ratio of 30%. A liquidity ratio is important because it states how much cash a bank to meet the request of its depositors.
The bank has ringfenced the assets which have had some challenges. T. In addition, it has developed a three-pronged approach. Remediation, Recovery, and Provision. The bank has also completely revamped its credit risk management system.
Vintage Non Performing loans is less than 0.5%
No bond raise for now
The bank has no plans in the short to medium term, the bank has no plans to issue another bond.
The bank is in a position to ramp up new credit across First Bank and all its subsidiaries. The bank expects some level of growth in its risk asset base.
FBN Holdings closed at N9.95 in yesterday’s trading session on the Nigerian Stock Exchange, up 0.51%. Year to date, the stock is up 13.07%