FBN Bank posts 75% CAR: reduces NPLs by 11%
Capital Adequacy Ratio (CAR) of First Bank of Nigeria (FBN Bank), for end-June 2021, stood at a staggering 75.65 percentage points.
The recorded CAR for Q2 2021 represents a 40.87 percentage points increment in the bank’s adequacy ratio on a year-on-year (yoy) basis as against the 34.78 percent CAR posted for Q2 2020.
With a Capital Adequacy Ratio 5.8 times more than the Central Bank’s 13 percent regulatory requirement, FBN Bank is more than capable of making provisions to cover potential losses incurred due to bad loans, protect depositors’ funds, and is in no way near to being insolvent.
The capital adequacy ratio (CAR) is a measurement of a bank’s available capital expressed as a percentage of a bank’s risk-weighted assets and liabilities.
Capital Adequacy Ratios mandate that a certain amount of the deposits be kept aside whenever a loan is being made. These deposits are kept aside as provisions to cover up the losses in case the loan goes bad.
Aside from posting a remarkably strong CAR, FBN Bank also strengthened its loan asset quality as it reduced Non-Performing Loans by 11 percentage points.
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On a yoy basis, FBN Bank’s NPLs declined from 21.42 percent to 10.03 percent in Q2 2020 and Q2 2021 respectively.
The improved NPLs of the bank indicate a higher level of loan repayments by debtors for Q2 2021.
Touching on the bank’s assets value, the value of the total asset for Q2 2021 amounted to Ghs 1,694 million. An increase of some Ghs 85 million from the value of the assets of Ghs 1,609 million was recorded same period last year.
The not-too-significant increment in the bank’s assets value was bolstered by an increase in loans and advances made to borrowers.
Loans made by FBN Bank increased from Ghs 218 million to Ghs 427 million yoy.
On the other hand, the bank’s liabilities for the review period also increased from Ghs 1.10 billion in Q2 2020 to Ghs 1.14 billion in Q2 2021.
Total comprehensive income (profit) for the period per FBN Bank’s Q2 2021 Unaudited Financial Statement, amounted to Ghs 26.8 million, a marginal increase of Ghs 1.6 million from the Ghs 25.2 million income recorded for the same period last year.
