Why we are investing in capacity building–
Atuche, MD, Bank PHB
By JAMES OJO, Abuja
Monday, December 17, 2007
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•Atuche
Photo: Sun News Publishing |
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The Nigerian banking industry is, indeed, the sector to watch
having consistently maintained a track record of excellent
return on investment in addition to good capital appreciation.
And in line with the profit motive of businesses, the investing
public looks obviously determined to take advantage of some
of the recent capital issues on the Nigerian Stock Exchange
(NSE) to increase their equity stake in the banks.
Mr Francis Atuche, Managing Director and Chief executive of
Bank PHB Plc, one of the few chief executives in the post
consolidation banking industry whose bank is shopping for
additional funds to play in the big league of global financial
market recently gave hints on the purpose, mission and prospects
of a bank that wants to be among the first 10 banks in both
Nigeria and the African financial services industry. He gave
some insights into the Bank PHB’s products and brand
innovations in the banking industry and capacity enhancement
programmes for staff and customers, especially for younger
generation, as well as of its commitment towards achieving
sustainable corporate social responsibility initiatives. Excerpts:
Mission and strategic intent
Various organizations are known for various things and there
is always a tendency to build a culture around such attributes.
But for us at Bank PHB, we believe in partnering with our
customers to ensure that we assist them grow stronger in whatever
business they are involved in.
You would observe that Bank PHB has emerged from the consolidation
programme with new strength and vision that have set all growth
indices soaring higher. That was a vision that has seen the
bank standing ahead of many of its competitors. In the last
five years or so, we have grown our earnings by well over
86 percent and profit by an average of 160 percent during
the same period, thereby underscoring management’s increasing
ability to convert revenue to profit.
Thus, this growth momentum coupled with innovative solution
to customers financial services needs as well as creation
of optimal value for shareholders are potent enough to launch
the bank into its strategic intent of becoming one of the
top five banks in the country by 2010. That incorporates a
minimum of 12 per cent market share of Nigeria’s rapidly
growing banking industry made possible through leadership
in six strategic areas of operation including asset base,
deposit base and equity footing. Others include profit before
tax, return on equity and return on total assets.
For this reason too we have also set the target of playing
a dominant role in the retail banking activities by the same
time, by increasing our retail accounts, servicing more efficiently
the banks delivery channels and increasing its retail lending
volumes. We also intend to introduce a number of customer
friendly financial products and raising at the same time the
number of products per customer.
Above all, our corporate objective is to build a financial
powerhouse that will present a new force in Nigerian banking
industry, as well as on the international arena, by spreading
through Africa to the global business community, the history
of corporate and banking success that is outstanding in relevant
indices.
The history of the bank’s success within the short time
is attributable largely to management’s ability to harness
its merger synergies and optimal asset deployment including
excellent portfolio that has continued to create consistent
value and profit to all stakeholders.
This is one organization that anticipates the financial needs
of its customers by creating specific products to satisfy
such unique needs. In this regard, we are consistently seeking
innovative ways to increase the financial options available
to our customers, in order to enhance their financial well
being. That means that the financial well being of our customers
is critical and perhaps the reason retail banking is our forte.
By a deliberate strategy, we have made efficient service delivery
a common denominator in all our offerings. That I believe
is what distinguishes us from others in the Nigerian banking
industry.
Motivation to bank’s brand driven campaign
All over the world, the general concept is that your brand
is you. That is also the mirror through which you are perceived
by customers and potential customers. It determines their
interaction with you, and, therefore, your financial well
being whether as an individual or an organization is dependent
on how your brand is perceived by your various stakeholders.
Having been able to build one of the most visible financial
brands in Nigeria in just two years is a testimony to how
much we value that brand. And I believe we are at threshold
of making more history, in the entire financial sector, since
the synergies of our brand equity are still unfolding.
We value our customers as strategic stakeholders and there
has been a deliberate effort from the bank to ensure that
the message of the brand development continues to make lot
of meaning in their minds and consciousness.
That is also the reason some of our campaign messages have
been receiving commendations and winning awards from different
segments of the Nigerian economy.
As long as we are there in the industry, Bank PHB will continue
to inspire all our customers especially the youths whom we
believe need a lot of reorientation as future leaders and
managers of the economy.
For instance, messages like: “Be you, be free, be brilliant
is what we are. For you to excel in life, you have to be you,
you have to be free and you have to be brilliant. That is
what Bank PHB stands for. Right from the Training School,
our employees are thought to be the bank and live the bank
in both their private and work lives. That way, they excel
in both. In fact, I must tell you that we are encouraged by
the various awards we have been privileged to receive. At
the same time, we feel challenged to remain progressively
consistent in those areas that we were recognized. For instance,
our award in corporate social responsibility is so dear to
us for so many reasons .
This is because we appreciate the fact that no organization
progresses without the support of its immediate business environment.
Our environment is special, and key to our business decision
since our desire always has been to ensure we plough back
into the society some of the benefits they have helped us
get.
Our focus in CSR is the youth and that is strategic, because
they represent the future of our great country, Nigeria and
are unfortunately faced with critical challenges they never
created. So, our intervention through the Bank PHB, National
Scholars Scheme, which provides scholarships to students in
every state of the federation, and building modern well-equipped
libraries in selected secondary schools, were all aimed at
helping youths meet their potentialities and promises in life.
We have also had the privilege of being the first Nigerian
organization to be selected by key nations for partnership
in their global programmes:
For instance, Bank PHB is partnering the US Government in
its prestigious Fullbright Scholarship; and the British Council’s
International Young Creative Entrepreneurs, IYCE, programme.
These are all visible indicators that our efforts are being
recognized locally and abroad and we feel highly honoured
by the developments.
Bank PHB offer: prospects for investors
This is the first time Bank PHB is approaching the market
to raise funds since the consolidation of the Nigerian banking
industry compared to other competitors that have repeatedly
come to the market. I must also add that the offer price is
well below our fair value, which most financial analysts have
placed between N26 to N35 per share.
There are several reasons investors should buy our shares.
But perhaps, the most important is the fact that, right now
it offers you the best opportunity to make good returns on
your investment. Most analysts have placed a ‘’strong
buy’’ recommendation on the stock and I want to
assure investors that our projections here are firm and sure.
From our track record, you can understand where we are coming
from and where we are heading to. Our fundamentals are strong
and we intend to sustain that performance in the years ahead
because the foundation has already been laid.
Our gross earning of N36billion in 2007 financial year represents
about 11 percent of the entire industry earnings for the year
and was about thrice the figure of N13.3billion recorded in
2006.It also shows that the bank had the highest year-on-year
growth in earnings, as it recorded a growth rate of 172 percent
in the year under review.
Again, the profit margin tells you how prudent the resources
of the bank are being put, and I wish to tell you in this
regard that we outperformed a number of competitors in the
2007 financial year. The bank also made the most return per
naira on the shareholders funds mobilized as the audited financial
statements showed we were able to convert about N27 of every
N100 of shareholders funds to profit in 2006 and this we have
continued to improve upon this year.
In terms of resource allocation and utilization, Bank PHB
has continued to prove that it remains one of the most efficiently
run financial institutions in the country
As clearly stated in our offer prospectus, we intend to utilize
the proceeds of the offer to, improve on our internal operations
and aid our expansion plans both within the country and outside
the country. This will see us strengthen our operation in
countries like The Gambia, Angola, and Ghana among others
in the nearest future.
Benefit of the IPO to Nigerian investors
The management of the bank is convinced that the solid foundation
we have on ground would create consistent good returns on
their investment. To date, for instance, we have offered investors
who bought into our private placement in 2005 over 500 percent
return on investment. This outstanding figure couple with
our ambitious expansion plans there is, therefore, every reason
to believe that Bank PHB has only exploited about 10 percent
of its potentialities, meaning that any investor that buys
into the bank still stands to reap up to 90 percent of our
potentialities. Our offer is coming at N17 rather than N30
recommended by investment analysts.
This is an initial Public Offer, as I earlier mentioned and
in pricing IPOs all over the world, the practice is to make
it as attractive as possible to encourage as many shareholders
as to be part of it. That is why the security was priced at
a significant 33 percent discount below the market price of
N25.51, which most analysts agree, was way below our fair
value.
The offer will help us develop a comprehensive range of retail
products and services along delivery channels. This retail
banking strategy is being drawn up with the technical assistance
UTI Bank of India. At the same time, management is deploying
about 18 per cent or N15billion on the development of the
retail and head office infrastructur.
Furthermore, we are planning another 175 new outlets over
the next three years to increase our presence and visibility
in the market place, while our electronic delivery channels
are being upgraded and expanded too.
With regard to share reconstruction, I wish to remind you
that we have already done the needed share reconstruction.
Going forward, therefore, we believe, we will grow our earnings
and profits to a level that will be strong enough to provide
more than adequate returns to our shareholders.
That is why we are assuring that the bank has the capacity
to absorb any oversubscription at the end of this public offer,
subject to what the regulatory authorities, which allows us
to absorb about 25 percent of the oversubscription. However,
there is a preferential allotment of 55percent, which we believe
will take care of other special interests of investors.
Bank PHB financial projection
As contained in the offer prospectus, management has come
out with a highly conservative financial projection, which
shows growth rates well below our historical five year growth
rate trends. This shows that the bank has capacity to surpass
its forecast in the years being considered.
It is in this regard that we have structured our local and
global expansion plan towards growing our network of branches
to over 240 in Nigeria alone.
The bank is committed to pursuing a Pan African expansion
strategy, which will, however, be dependent on how fast we
get regulatory approval in the respective countries
In the next year, the bank will expand its branch network
to about 240 all over the country coupled with our Pan African
branching initiative where we expect to have branches in major
African countries within the same period. As we move to fortify
our international competitiveness, through alliance with Fortis
Investments, the current offer is expected to place us on
the thresh hold of $1billion which will enable us qualify
to manage part of the country’s foreign reserves as
stipulated by the Central Bank of Nigeria.
SME financing in Nigeria
We have a commitment to develop the Small and Medium scale
industries, which we consider critical to the growth of the
Nigerian economy. This an objective we have continued to pursues
and will continue to support entrepreneurs with credible and
workable business plan to ensure they achieve their dreams.
On a national scale, we intend to finance real sector projects
with foreign currency cash flows which are also very key in
our scheme of activities.
In this regard too, Bank PHB has made very substantial provision
from its profit after tax over the past few years, even though
the SMEEIS programme is now optional. We believe that that
sector holds a lot of promises to the Nigerian people in meeting
her development aspirations. Another strategic action plan
on our agenda is to grow our mortgage finance portfolio which
we recognize as a high growth sector of the economy given
the huge demand for housing in the country
We expect the demand for mortgage products to increase phenomenally
in the next few years with planned issuance of an estimated
N97billion home mortgage bond by the Federal Mortgage Bank.
Because of the potentialities we expect from that sector,
we are already designing appropriate products for our prospective
home owners in the area, to ensure that the contribution of
the mortgage business to our GDP is raised substantially.
This is also partly because we have discovered that most of
the developed and developing economies in South-East Asia
and even Europe started out by strengthening their small and
medium enterprises, through the creation of an enabling environment
for such businesses. As a bank we would continue to contribute
our quota towards ensuring that government and personal business
aspirations are met.
In Bank PHB, SMEs occupy a prominent place in our business
plan and we want to take that commitment to a higher level
as resources and opportunities come up.
Similarly, we have carefully planned out strategies for improving
the performance of the real sector because we believe and
very strongly too that the real sector is the primary beneficiary
of the banking consolidation programme. Right now, you know
very well that interest rates are now in low double digits,
compared to pre –consolidation period, and credit expansion
to the sector has gone up steeply. But it must be realized
that it is not everyone who would benefit from the developments,
because banks, as custodians of people’s funds, can
only give credit to businesses and people who clearly demonstrate
commitment and proven ability to defray those funds.
Capacity building initiatives
We have a quality training school through which all our newly
employed go. We also have a consistent training schedule in
place for experienced staff which ensures that employees are
always at the cutting edge of the latest practices in the
banking industry. As a professionally managed bank, we go
into businesses and activities that will make impact in the
lives of people especially our customers and the society.
And you know, as well as I do, that international organizations
do not just seek you out unless you meet with the requirements
which are usually stringent. I guess in seeking us out, they
recognized our desire to comply with the international standards
of best practice in our business operations.
Bringing Donald Trump Apprentice to Nigeria
It is partnership with Storm Records and The Executive Group.
They brought the Franchise and we realizing it aligns with
our objectives of inspiring the Nigerian youth to achieve
their potentialities decided to buy into it. It is not a question
of money, it is about ideals that can change Africa for the
better and being the type of organization as we are, we could
not just afford to ignore such an opportunity. The apprentice
Africa will commence in February 2008. As it was with The
Intern, we intend to inspire in Nigerian youths the virtues
of entrepreneurship and leadership, so that they would able
to make a difference in whatever profession they find themselves
in life.
We are looking at growing a set of independent-minded managers
who could be able to take initiatives without waiting to told
what to do. We believe that if we are able to raise quality
of manpower at the helm of affairs of different organizations,
Nigeria’s leadership crisis would be drastically reduced.
This is what we have set our mind to achieve and we are prepared
to make a difference in that direction.
Improving Bank PHB brand through apprentice
Reality Shows all over the world are popular and have proven
to be one of the easiest ways to connect with the audience.
It will not only improve on our brand but it will communicate
what we stand for, an institution that has very strong beliefs
in the future of Nigerian and African youths to surmount the
challenges of their environment.
In the next five years, we are looking at becoming one of
Africa’s top 10 leading financial institutions, carrying
out business in a socially responsible manner, a benchmark
for service excellence and providing its shareholders with
one of the best returns in the financial industry. We intend
to achieve this vision by continuing to look for new ways
to satisfy our customers. That is the only way we will remain
in business and that is the only way we will get new customers
and expand our business. So, we will continue to make the
customer our primary focus.
Be you, be free, be brilliant. Nigeria is a great country,
Africa is a continent of vast opportunities and interests.
Bank PHB is set to partner you into that future. Be part of
us. Invest in us.
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