FSB Moves to Improve Profitability
Banking
The 13-month suspension of FSB International Bank's foreign exchange trading licence by the Central Bank of Nigeria (CBN) in 2003 for alleged foreign exchange related offenses has taken a heavy toll on the bank's profits.
The board and management of the bank had announced a N2.6 billion loss for the financial year ended March 2003.
The loss was a result of the 13-month ban by the CBN, which drastically reduced the bank's operating income from foreign exchange, Letters of Credit (LC), trading commissions and other related business as their valued customers had no option at that time than to move their business to other banks in search of foreign exchange.
The bank's profitability situation was worsened by a significant increase in its loan loss provisions as the bank proactively provisioned for some doubtful loans primarily to the construction sector which currently has a significant portion of its funds tied up in the huge domestic debt of the Federal Government.
Unconfirmed sources however, informed that the loss position may have been reversed as a result of an internal aggressive debt recovery drive and re-engineering of the business processes.
In spite of the above, FSB still displays a very strong balance sheet and liquidity position. The total Assets of the bank including contingents grew by 12.5 per cent from N41.2 billion in March 2002 to N46.3 billion in March 2003.
Similarly, the deposit base grew by 29.9 per cent from N19 billion to N25 billion respectively over the same period. The liquidity and capital of the bank is still very strong at 40 per cent and 12 per cent respectively despite the loss position.
The management of the bank has swung into action to reverse the situation by undertaking a major reorganization and realignment of positions.
The Risk Management Unit of the Bank, THISDAY chexks revealed, has also been strengthened with the infusion of new staff, processes, risk management models and templates.
Additionally, a Business Process Re-engineering (BPR) exercise was carried out and has resulted in a redesign of over 60 key processes in the bank to ensure faster and more effective service delivery.
On the business development front, the bank, sources disclosed, has developed a new business model and strategy aimed at turning around the fortunes of the bank and positioning it as one of the foremost financial service institutions in the country.
The new business model, THISDAY gathered, is designed to refocus the institution by building on its core competence as a strong retail bank.
The management of the bank has consequently been re-organized to emphasize low cost deposit mobilization, aggressive market penetration to recapture lost market share, high quality services, tighter cost management as well as deployment of superior products to the market.
Implementation of the above initiatives, sources disclosed, has since begun in earnest and remarkable progress has been made.
The management says it is confident that "these measures will result to a stronger and healthier FSB that is fully prepared to meet the challenges of the future."
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