FBN Holding Customer Deposits Rise to N2.6trn, Other Indicators Up …. Banking regulatory  cost rises by 44.5%, accounts for 13.2% of FBN operating cost

Total customer deposits of First Bank group rose 6.4 percent to N2.6 trillion, not too fa from the budget of the entire country and clearly more than the budget of the individual state governments.
 Competition for deposits has continued to intensify, which coupled with regulatory interventions, suggest that funding costs across the industry will continue to rise. In this regard, FirstBank’s diverse and extensive funding base, with retail deposits accounting for about 50 percent of the deposit base, cuts across over 9 million customer accounts, with a relatively high core portion, provides very stable funding. We will continue to strengthen our deposit gathering franchise, leveraging our extensive retail platform and deep customer relationships.
 Non-interest revenue (NIR) rose a marginal 2.4 percent year-on-year (y-o-y ) to N44.1 billion (June 2012: N43.1 billion), impacted by a 15.9 percent decline in fee and commission income (57 percent of NIR), which was offset by the 44.7 percent growth in other operating income and very strong growth (+155.8 percent) in foreign exchange income. This underscores the success in replacing income streams lost in the decline in fee and commission income, which was driven primarily by a 21.9 percent decline in commission on turnover, coupled with a 75 percent reduction in credit-related fees (due to the reclassification of certain credit related fees in the current period into other fees & commission as well as for purposes of computation of effective interest rate), as well as the onset of the CBN’s revised banking tariffs. The revised tariff now requires fees previously charged periodically over the life of the facility, to be charged as a one-off throughout the life of the facility – depending on the terms of agreement. As a result, management fees will now only be charged on new loans created during the period under review.
 Operating expenses rose 3.1 percent to N92.2 billion y-o-y (H1 2012: N89.4 billion), well below average inflation rate of 8.8 percent as we continued to consolidate on the expense base. Regulatory costs[2] rose 44.5 percent, and now constitute 13.2 percent of operating expenses, relative to 9.4 percent in the year ago period. In particular, AMCON levy rose +77.3 percent while the NDIC14 premium rose 17.0 percent. Driving the consolidation in the cost base was a 1.1 percent reduction in staff costs and a 3.6 percent reduction in other operating expenses which constitute 48.8 percent and 31.8 percent of operating expenses respectively. This reflects benefits of the various business repositioning, transformation and cost optimisation initiatives we have embarked on over the past few years.  
 The cost-to-income ratio improved to 55.2 percent, in line with 55.5 percent recorded in the corresponding period in 2012, and significantly lower than the 57 percent as at First quarter of 2013 and 61.9 percent as at December 2012.

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