With Alebiosu, FirstBank is moving into an era of growth consolidation

Following an era of accelerated growth that saw its assets quintuple (from about N4 trillion in 2014 to over N20 trillion in Q1), First Bank of Nigeria Limited experienced what many would describe as a golden decade under the leadership of the Adesola Adeduntan team . With Risk Manager on the leadership team, Olusegun Alebiosu, now Leading CEO, the leading financial institution can move towards a sustainable development phase, writes GEOFF IYATSE.

The 130 years of First Bank of Nigeria’s gripping history is in many ways a corporate textbook. Its history is as much a lesson as its challenges. Its leadership and the selection of leaders are fascinating chapters in the book it has become, confirming the idea that every era in human history is shaped by the king of the moment.

This is true across the corporate landscape, but it is unique to Nigeria’s leading bank. Given its dispersed ownership structure, its leadership is particularly dynamic, which adds a lot of variety to the journey. The confirmation of Olusegun Alebiosu as the bank’s new CEO is seen as a consolidation of the bank’s rich culture.

At a special moment in its 130-year history, a new FirstBank has emerged, ready to compete with new market entrants to reclaim the market it has held in its grip as a monopolist. First, the bank is consolidating the implementation of the new “click banking” through which it has made significant investments in digital infrastructure.

A success that Alebiosu contributed to
Corporate performance in Q1, the quarter announcing Alebios, was particularly compelling on top and bottom lines. First, the bank’s total assets increased 28 percent year-over-year to $20.7 trillion, while gross profits increased 178 percent to $682.5 billion, driven by strong loan book growth (which was 33 percent more from December 2023). Non-interest income, which reflects robust trading platforms, doubled year-on-year to N224.6 billion compared to N110 billion earned in the first quarter of 2023.

The CEO also commented on the favorable financial indicators, stating that pre-tax profit saw an exponential increase of almost 300 percent to N209.8 billion, while profit after tax increased at the same margin to N188.5 billion. These are not isolated numbers, but a reflection of the banking group’s decade of solid performance that powers a holding that has become the toast of investors in recent years.

First, FirstMobile, its digital banking app, has become a household name in the fintech ecosystem. In 2015, when the platform was still in its infancy, its user base was around 60,000, which grew to over six million last year. This has contributed greatly to changing the market perception of the institution from a traditional bank to an innovative digital bank.

The bank said that more than 85% of its transactions are now initiated through digital platforms, suggesting that while it is consolidating its security as a thrift bank, it has also emerged as a transaction-oriented bank.

FirstMobile seems to have hit the nail on the head in the bank’s reinvention drive and efforts to appeal to a younger demographic. However, the platform is just one of many telecom-based initiatives the bank has rolled out to attract young depositors.

FirstOnline also grew rapidly in terms of user numbers – from around 90,000 to over a million in less than a decade. USSD banking, under the supervision of his immediate supervisor, has become even more successful, with the number of users growing by almost 3,000 percent over the last eight years to approximately 15 million. What USSD banking, aimed at mobile phone users and rural communities where internet penetration is still very low, has done for the bank by giving part of it to the original owners – rural residents and non-internet users who have never known any bank other than FirstBank .

The success of Firstmonie Agent Banking also confirms its long-standing popularity in rural areas. Last year alone, Firstmonie Agent Banking services processed over ₦1.1 trillion in transactions, which is more than double the amount handled by seven other major banks.
Its strategic investments in technology include the development of an interactive transaction banking platform known as FirstDirect2.0 and the introduction of a humanoid robot into the country’s banking ecosystem. Its smart banking initiatives have been complemented by Digital Xperience Centres (DXCs) currently located in Lagos, Ibadan and Abuja, with plans to open more across the country.

Overall, the company’s digital banking has evolved both in volume and public perception, even with AI-driven advertising adding to its digital footprint. The ease, convenience, and reliability created in recent years have taken its customer base from 0.6 million in 2015 to well over 42 million accounts by 2023. According to Adesola’s former CEO Kazeem Adeduntan, that number is expected to double in the near future as the organization more aggressively migrates to transaction banking.

Last year, its holding company earned N171.8 billion in fee and commission income, up 46% year-on-year, demonstrating its success as a transaction-based bank. The increase in fee and commission income was no exception, but was driven by impressive performance across the board.

Its operating profit also increased by 129 percent, well above the industry average, to N361.8 percent, translating to earnings per share of N8.56 thousand. N. Total assets also increased by 60 percent to N16.3 trillion. Total assets, like other indicators, increased by over 300 percent from 2015 when it stood at N4.2 trillion.

FirstBank has also experienced aggressive growth in its customer base over the past nine years, growing from 10.9 million to more than 42 million customers, leading to aggressive growth in the bank’s fee and commission income.

The bank offset the impressive performance numbers of the last decade with significantly improved asset quality. For example, the Adeduntan team magically reduced its non-performing loan (NPL) ratio from 45 percent in 2015 to four percent (lower than the industry average and regulatory threshold). At the forefront of the risk management structure that achieved this feat was Alebiosu.

The Risk Czar is here
Now, the Alebiosu MD/CEO may be looking at his new office through the eyes of a risk manager. While the new leadership is not expected to have an impact on Adeduntan’s growth rate, perhaps the cruise control could increase in the coming years, reflecting the cautious nature of the typical risk-managing CEO.

In selecting Adeduntan’s successor, the bank’s board took into account its recent growth trajectory and the storm that had unfolded before Adeduntan, during which nearly half of the institution’s loans were at risk. Although these are two different eras, the Nigerian banking system is entering a critical phase, reminiscent of the 2005 recapitalization that created a lot of unused funds and the rise of reckless lending that sank the industry.

So FirstBank’s board is an early mover in what could be an industry race in the coming months — pricing growth into risk management in management appointments and investment decisions. That’s all the more important as the industry grapples with macroeconomic instability, including a sense of underdog created by a bubbling fintech industry that has hijacked the culture of travel lending.

The appointment of Alebios must have been well-considered, given his pedigree as a risk management expert. The bank has always emphasized that ensuring risk management is crucial for it.

There is no doubt that the establishment of Alebios is in line with the bank’s plan to further strengthen control and effective risk management, especially considering the fact that the bank has recorded good results in recent years and has reached an advanced stage of growth.

Prior to Alebiosu’s appointment, he held the positions of Executive Director, Chief Risk Officer and Chief Compliance Officer, a position he held since January 2022. Previously, he was Group Executive Director/Chief Risk Officer, a position he held for six years from 2016.

He brings to the bank’s board more than 28 years of experience in the banking and financial services industry, with cross-functional exposure to credit risk management, financial planning and control, credit and marketing, trading, corporate and commercial banking, agricultural finance, oil and gas, transportation (including aviation and shipping), and project finance. This also suggests that he is as much a pro-growth banker as he is a conservative risk manager.

The nominee started his career in 1991 with Oceanic Bank Plc (now merged with EcoBank Plc). Prior to joining FirstBank in 2016, he was Chief Risk Officer of Coronation Merchant Bank Limited, Chief Credit Risk Officer of African Development Bank (AfDB) Group and Group Head of Credit Policy and Deputy Chief Credit Risk Officer of United Bank for Africa Plc.

With such high credentials, there is no doubt that the new helmsman at FirstBank, who is currently leading the bank’s transformation program, is committed to offering value through innovative financial solutions, combining unrivaled scale, industry knowledge, market knowledge and many years of experience in financial management, is performing well -prepared for work. He understands the bank’s mentality that the safety of customers and the security of their transactions comes first.

The biggest challenge for the Alebiosu-led team is to achieve the new minimum capital base of N500 billion in less than 24 months. There is no doubt that a bank like FirstBank will attract new investors from all over the world. The team’s ultimate task may be to combine investments that mesh well with Alebios’ risk sensitivity.