FBN Holdings Gets Merchant Bank Licence, Pays N3.26bn Dividend

The Central Bank of Nigeria (CBN) has approved merchant bank licence for FBN Holdings Plc through its subsidiary Kakawa Discount House Limited, the Group Chief Executive Officer of FBN Holdings, Mr. Bello Maccido, said yesterday. Speaking at the company's third annual general meeting (AGM) in Lagos, Maccido said the final approval was granted to the company by the apex bank on May 19. According to him, the new business line would afford additional avenue to sell investment banking products to its esteemed customers. "To have a merchant banking licence will be beneficiary to the shareholders medium to long-term. It will also afford the company the opportunity to pay enhanced dividend in the nearest future," he said.

Meanwhile, shareholders of FBN Holdings Plc have approved the N3.26 billion recommended by the directors. However, the shareholders said the dividend, which translates into 10 kobo per share was small.
Responding to the complaints, Chairman of FBN Holdings, Mr. Oba Otudeko explained that the low dividend pay-out was as a result of the significant reduction in dividend received from its subsidiaries especially First Bank of Nigeria Limited.


According to him, as a result of increased capital requirement by the CBN, occasioned by the adoption of Basal 2 Capital Accord, First Bank Limited had to reduce its pay-out ratio and retained substantial portion of its profit to boost capital.

"This has impacted the capacity of FBN Holdings Plc to pay dividends hence the proposed cash dividend of 10 kobo per share and a scrip issue of one for every 10 shares held translating to an 11 per cent dividend yield. With the retention of N79.6 billion, we are confident that the capital adequacy ratio of First Bank is adequate for its business in the short to medium term. Hence, FBN Holdings has no immediate plans for any capital raising exercise especially given the currently depressed prices in the capital market,” Otudeko said.

Commenting on the performance of the group in 2014, Otudeko stated that notwithstanding the tough macroeconomic and regulatory terrain, business groups across commercial banking and insurance all recorded remarkable banking and asset management progress consolidating market leadership in various segments.

He said, “While the commercial banking group leveraged the growing oppourtunities in trade and transaction banking in our domestic markets as well as across the six West African economies in which we operate and Europe, the investment banking arm was able to seize the oppourtunities arising from ongoing reforms in the power sector and divestment of oil and gas assets by foreign players to record a remarkable growth in earnings over the previous year," he said.

FBN Holdings ended 2014 with Profit before tax N92.9 billion compared with N91.3 billion in 2013, while profit after tax rose to N82.8 billion from N70.6 billion in 2013. (Thisday)