By Goddy Egene, 04.27.2010

First Bank of Nigeria Plc is set to increase its authorised share capital from N15 billion to N25 billion, apparently to create room for future capital raising exercises that would enhance its future performance.

First Bank last week disappointed investors with a lower-than-expected 10 kobo dividend and a bonus of one for eight shares recommended by the directors for the year ended December 31, 2009. This followed a slump of 91 per cent in profit from N33.9 billion to N3.2 billion.But the bank raised investors' hopes for a prosperous 2010 with a first quarter profit before tax of N15 billion for the first quarter ended March 31, 2010. According to the Q1 results, First Bank posted gross earnings of N62.4 billion as against N69 billion in the corresponding period of 2009 and a profit before tax of N15.4 billion as against a loss of N9.8 billion in 2009.

And in order to create more room for bonus issues and capital raising, the directors of the First Bank have proposed that its authorised share capital be increased from N15 billion made of 30 billion ordinary shares of 50 kobo each to N25 billion made of 50 billion ordinary shares of 50 kobo each.The approval is expected to the given by the shareholders of the bank at the Annual General Meeting (AGM) scheduled to hold in Abuja in May. It would be recalled that some of the shareholders of the bank had experienced mixed feelings about the 10 kobo dividend and bonus of one for eight.

For instance, the National Coordinator, Independent Shareholders Association of Nigeria (ISAN) Sir Sunny Nwosu, said that the dividend and bonus are just to compensate shareholders.“I see the returns recommended by the Board as a mere compensation. Given the past record of First Bank, this is poor. But I believe they did not in order not to allow shareholders to remain without dividend,” he said.Speaking in the same vein, the Chairman of Ibadan Zone Shareholders Association, Chief Oluremi Oyepeju, said the performance is disappointing. According to him, the result did not meet their expectations because they have seen the results of some banks that hitherto wait for First Bank to release its results before declaring their own returns.

But the President of Association for the Advancement of the Rights of Nigerian Shareholders, Dr. Farouk Umar said First Bank should be commended for the dividend and bonus shares. “For declaring dividend and bonus, the action is commendable. Do not forget, every bank has infractions, it is only the magnitude that is different. We all know the situation on the ground,” he said.However, the future appears to be bright for the shareholders given the Q1 results. Speaking on the results, the Group Managing Director, Mr. Bisi Onasanya, said: “The operating environment in the first quarter of 2010 continued to be challenging, as high liquidity and slow growth in the real economy led to inflationary pressure which caused a significant drop in yields, resulting in a noticeable decline in gross revenue;

“Group customer deposits grew by 5.1 per cent for the quarter and these came mostly in the form of cheaper demand deposits. We also continued to prudently grow our risk assets at group level. This prudent yet sustained asset growth combined with a rising and cheaper deposit mix bodes well for sustainable profit growth in 2010. We have also introduced innovative measures to improve operating efficiency and we expect these to further boost profitability in the second half of 2010,” Onasanya said.

According to him, these encouraging developments are coming on the back of the bank's continued efforts to structure innovative and popular products, while continuing to introduce new ways to improve levels of customer services; through its service excellence related initiatives that  were  introduced in 2009.

(Source:ThisDay)