The management of FBN Holdings Plc has said the low dividend pay out to shareholders in 2014 financial year is as a result of the significant reduction in dividend received from its subsidiaries, especially First Bank Limited.
The holdings had paid a dividend of N1.10 per share for 2013, as against the cash dividend of N0.10 kobo in 2014, in addition to a scrip issue of one for every ten shares held.
The group managing director of FBN Holdings, Machido Bello, who disclosed this at the third annual general meeting of the holdings company in lagos on thursday, said, “the reduction in dividend from First Bank was as a result of increased capital requirements by Central Bank of Nigeria (CBN), occasioned by the adoption of Basel 2 capital accord.
“The bank has reduced its pay-out ratio and retained substantial portion of its profit to boost capital. This has impacted the capacity of FBN Holdings to pay dividend.
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,” he said.
The chairman of the company, Dr. Oba Otudeko said that in spite of the challenges, FBN Holdings delivered impressive results in 2014, across a number of key financial metrics including gross earnings and profit before taxes, saying that the performance is championed by the commercial banking franchise, First Bank Limited and buoyed by the investment banking and asset management banking space.
He also noted that the newly strengthened insurance group delivered exceptional results in 2014, doubling its profit before tax numbers from prior year.
He added that the group achieved significant mileage in its effort to strengthen its earnings base and expand into sectors that are capable of providing us with the right opportunities to fortify our leadership position in the sub-saharan Africa market.
He pointed, “in 2014, we completed the acquisition of 100 per cent equity interests in Kakawa Discount House Limited and Oasis Insurance Plc. These recent acquisitions are in addition to our recently concluded acquisition of five ICB banks across West Africa, providing our commercial banking franchise the leverage to dominate and deliver exceptional bouquet of service offerings beyond the Nigerian borders.”
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