CORRECTED-UPDATE 1-Nigeria's FBN Holdings injects $66 mln from insurance unit sale into First Bank

© Reuters.

(Corrects to show that pretax profit rose in half-year)
By Chijioke Ohuocha
ABUJA, Aug 3 (Reuters) - Nigeria's FBN Holdings Plc
FBNH.LG has sold its life insurance company and invested the
proceeds of 25 billion naira ($66 million) as equity into First
Bank to boost its capital after restructuring its loan book, FBN
said on Monday.
Nigeria's banks are expected to take a big hit to revenues
and face rising borrowing costs this year as central bank
measures to support the naira squeeze lenders already hit by
fallout from the coronavirus and the oil price shock, analysts
say. Chief Executive Officer Urum Kalu Eke said FBN Holdings sold
its 65% stake in FBN Insurance to South Africa's Sanlam Emerging
Markets, a minority investor in the business.
He said the group wanted to focus on improving shareholder
value with the divestment and boost the capital position of its
commercial banking unit, First Bank, to 16.53% as of June, from
15.5% a year ago, close to the regulatory minimum of 15%.
"The outlook continues to remain uncertain. We think that
the remaining part of the year will be challenged," Eke said on
an analyst call.
In 2010, the central bank directed lenders to either sell
their stakes in subsidiaries involved in activities including
insurance, asset management and investment banking - or adopt a
holding company structure, where those activities are separate
from the holding of retail deposits.
FBN Holdings said last Wednesday pretax profit rose 14.3% in
the first half to 41.4 billion naira while loans grew 7.7%, led
by short-tenured credit due to a low interest rate environment.
First Bank said it had restructured around 15% of its $4.6
billion loan book by mid-year after the central bank asked banks
to allow customers struggling due to COVID-19 to defer interest
for one-year.

($1 = 381.00 naira)