FBNH Shares Jumps 59.44% Despite Internal Upheavals
The share price of FBN Holdings Plc appreciated by 59.44 per cent to close at N11.40 in 2021, showing an impressive performance in a year the bank and its subsidiary, First Bank of Nigeria Limited, were soaked in boardroom politics that tested the very foundation of the Nigerian older bank.
FBNH share had opened at N7.15 in January 2021, gaining N4.25 to close the year’s trading in December.
The bank’s turnover volume and value of share jumped from 8.61 million units and N66.78 million to close at 77.93 million units and N887.54 million, representing 805.11 per cent and 1229.05 per cent rise respectively.
Meanwhile, a pandora’s box broke open, in the review year, when FirstBank and its parent company, FBNH, got enmeshed in internal upheavals, leading to a tsunami that swept away the bank’s board of directors.
As a result of the crisis, the Chief Executive Officer of FirstBank, Sola Adeduntan, was removed forcefully, but the intervention of the apex bank brought him back.
Adeduntan was removed by the Ibukun Awosika-led board, which resulted in the sack of Awosika as Chairman of the board of FirstBank and Oba Otudeko as chairman of the board of FBNH.
The Central Bank of Nigeria(CBN), over the years, has been burdened with some high-profile cases of insider-related abuse by members of the board of directors of commercial banks and other financial institutions.
In 2016, when CBN discovered a great NPL and financial inadequacy ratio of FirstBank, the bank was placed under a forbearance.
The CBN, with the management of FirstBank, had agreed that forbearance is written off for about four years to save the bank from collapse.
Last year, the demand was on the FirstBank to properly reclassify insider loans as well as reposition the bank’s management board.
There was also the demand for CBN to focus on the general health of the banking sector to build confidence in the country’s financial system vis-à-vis international finance organisations.
In the five months of 2022, January to May, the shares of FBNH have also gained 4.39 per cent to stand at N11.90.
Despite the crisis in 2021, FirstBank delighted investors with a pleasant surprise when it announced stellar results confirming that its turnaround strategy pinned on the pillars of innovation, resilience and digging deep is working.
Results from the bank’s financial book showed that its profit after tax spiked 108 per cent to N32.4 billion on the back of massive loan recoveries and a sharply lower level of 6.1 per cent non-performing loans in 2021.
According to Financial Derivative Company(FDC), FirstBank is reaping the benefits of a solid legacy the bank built over the years.
Its Capital Adequacy Ratio(CAR) increased to 17.4 per cent, giving it the much-needed buffers required to withstand financial shocks and turbulent headwinds in the coming quarters.
FirstBank, one of a handful of banks that adopted the holding company structure, has been proven right as almost all the other Tier-1 competitors have emulated the model.
As far as competition is concerned, FirstBank is fighting hard to recover lost grounds to the nimble fintech, the highly capitalised and efficient telecommunications companies their payment savings bank subsidiaries, FDC said.
“Indeed, FirstBank is well equipped to fight amongst the sharks in this blood-soaked ocean.
“We expect to see FBN stock rise in the months ahead due to its massive undervaluation-one its evident potential upside. We recommend the stock as a buy,” FDC stated
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