Company/Equity Research Report

BUY Fair Value = N 12.43 October, 2011

FIRST BANK PLC: The Most Diversified Financial Conglomerate in Nigeria.
Company Background
First Bank is the first major financial institution founded in Nigeria; hence the name. The bank was incorporated in August 1964, and listed on the floor of Nigerian Stock Exchange in March, 1971. First Bank Plc is a leading Nigerian Bank with a corporate banking base and strong service culture that has led to consistent year on year growth in the bank’s clientele base and financial indicators.
Company Profile
Equity Identity Sector Head Office Location Branch Network Date of Incorporation Date of Listing Year High (20/01/2011) Year Low (27/9/2011) Year End Trading Price Current EPS Outstanding Shares FIRST BANK Banking Marina, Lagos. 611 15th August, 1964 Match,1971 N 16.12 N 8.50 December 31st N 10.00 N 0.83 32,632,084,358

Bank Products and Services
First Bank of Nigeria as popularly called is a household name in banking sector in Nigeria. The bank provides a full range of commercial, investment and retail banking products/services to its discerning corporate, commercial and retail customers. The bank is well diversified through its subsidiaries in the capital market operations, insurance services, asset management, private equities/venture capital, pension fund custodian management, registrar services, trusteeship, mortgage and microfinance banking.

Table 1: Operating Results for the year ended 31 December, 2010. FYDEC,2010
N'Billion 230.606 43.188 -9.777 33.411 0.83 0.60

Planned Activities
Directors of First Bank Plc have disclosed their plans to further consolidate the bank’s footprint in Nigeria and diversify its assets. Over the long term, international expansion becomes a priority and has commenced this via carefully considered plan to establishing its banking franchise in priority nations. The bank also revealed its strategic vision to be centered on key areas of growth within the Sub Saharan Africa economy, improving the group’s products and services and upholding operational competence.
Table 4: Banking Subsidiaries of First Bank Plc (Offshore)

Financial Year
Gross earnings Profit Before Tax Taxation Profit After Tax EPS(N) DPS(N)

FYDEC,2009
N'Billion 193.966 13.297 -8.396 4.901 0.11 0.10

%Gain /Loss
18.89 224.80 16.45 581.72 654.55 500.00

FY2011E*
N'Billion 245.826 48.293 (10.468) 37.825 1.16 0.60

Source: First Bank Plc 2010 Annual Report, PAC Research Estimates

S/N 1 2 3 4 5

Name
FBN (London) Limited FBN (Paris) Limited FBN (Johannesburg) Ltd FBN (Beijing) Limited banque int’l de credit

Country
UK France S/Africa China Congo

Year of Establishment
2002 2007 2004 2009 2011

Table 2: First Bank Plc’s Third Quarter Results for Sept. 2011.

Financial Year

Q3SEPT,2011
N'Billion

Q3SEPT,2010
N'Billion 177.065 40.703 (8.141) 32.562

% Gain/Loss

Gross Earnings Profit Before Tax Taxation

211.166 49.017 (6.127) 42.890

19.26 20.43 (24.74) 31.72

Source: First Bank Annual Report

Industry Status of First Bank Plc
FirstBank has an unlisted Global Depository Receipt (GDR) programme. Till date, and despite the downturn in the stock market, the Bank remains the most capitalised stock in the banking industry on the floor of The Nigerian Stock Exchange (NSE). First Bank has ten (10) subsidiary companies in Nigeria and five (5) international banking subsidiaries which provide a comprehensive range of retail and corporate financial services. First Bank clinched the 2010 Top 1000 World Banks ranking where the bank was ranked first among other Nigerian banks by Financial Times of London. In further evidence of the Bank’s strength, two foremost international riskrating agencies, Standard and Poor’s (S&P) and Fitch, have rated the Bank highly. In line with CBN’s guidelines, First Bank has announced its intention to adopt a Holding Company structure to manage the bank and its subsidiaries.

Profit After Tax

Source: First Bank Quarterly Results, PAC Research Estimates Table 3: Non Banking Subsidiaries of First Bank

S/N 1 2 3 4 5 6 7 8 9 10

Subsidiary
First Pension Nig. Ltd First Registrars Limited First Trustees Nig. Ltd FBN Mortgages Limited First Funds Limited FBN Microfinance Bank Ltd FBN Life Assurance Ltd FBN Insurance Brokers Ltd FBN Bureau de Change Ltd FBN Capital Limited

Nature of Business
PFA Registrar Services Trusteeship Mortgage Private Equity MFB Insurance Insurance Bureau de Change Capital Market

Holding (%)
100 100 100 100 100 100 65 100 100 100

Source: First Bank Publication

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FIRST Bank Plc

I

October, 2011

2011 .63 7. and Access Bank Plc 2|Page FIRST Bank Plc I October. Bonus History and their 2011 Forecasts Year EPS(N) DPS(N) Bonus 2011E* 1.5 1 1.53 in the same period of 2009.56 2 2.00 1.35 0.23 0.50 2.60 9.00 2.00 0.693 17.16 0. Source: First Bank Annual Report.49 in the year ended 31 Dec 2010 from 2.165 1.188 42. However.5 1. PAC Research Estimates Figure 3: Earnings per Share History over Five Accounting Periods Earnings per Share History of First Bank 2010 2009(Dec) 2009(Mar) 2008 2007 0 0. Return on Earnings (ROE) of First Bank of Nigeria Plc appreciated from 6.39 1.22 7.335 36.11 0.10 1 for 6 2009 (MAR) 1.50 3.36 32.00 38.09 0.50 0.606 169.20 1 for 4 2007 1.60 1 for 6 2010 0. The trend shows that the stock was moving along with the market (NSE Index) and reached its peak in January 20.83 1.50 1.5 Source: NSE. Net Profit Margin (NPM) of First Bank Plc witnessed an astronomical percentage growth rate of 14. Dividend.66 per cent which shows that the bank is one of the most profitable and competitive in the industry.34 22.5 1 0.73 per cent in the corresponding period of 2010.83 Source: First Bank’s Annual Report.86 per cent in the year ended 31 Dec.41 2.065 14.77 1.73 25. GT Bank.957 45.5 0 2007 2008 2009(Mar) 2009(Dec) 2010 0.370 138.5 0. 2009 to 18.73 per cent of First Bank is very competitive in the industry.957 First Bank Plc underperformed the NSE All-share Index during the period under review as shown in figure 1 above. Zenith Bank.669 N'Billion 33.37 16.347 157.23 1. 2011 at about N16.56 1.35 18.94 Source: Annual Reports of First Bank. The growth is attributable to the high premium the bank pays on business line expansion.00 3. the ROE of 18.475 3.41 n/a n/a 2008 2. UBA Plc.667 1.49 19.68 26.12.PanAfrican Research Figure 1: Relative Performance of FIRST BANK Plc Share Price to NSE All-Share Index over a Year FIRST BANK 4.60 1 for 8 2009 (DEC) 0.763 1. PAC Capital Research Estimates 2 1.411 33.83 0.98 8.666 79.11 1.49 1.00 NSE Index Table 5: Earnings.50 0.87 2.167 12. PAC Research Estimates Table 6: Industry Analysis of some banks in the Banking Sector Company Gross Earnings N'Billion Profit Before Profit After Tax Tax N'Billion 43. This is a bit below the peer average of 15.931 Net Profit Margin Return on Earnings EPS N P/E Ratio First Bank Plc Zenith Bank Plc GT Bank Plc UBA Plc Access Bank Plc 230.512 2.00 1 for 6 Source: First Bank Annual Report E* = Forecast (Expected Value) Figure 2: Total Assets of First Bank over Five Years (N’b) Total Assets of First Bank over five years(bn) 2.

please contact our offices: Lagos: 8A. Onitsha. In our application of Relative Strength Index (RSI) as an indicator of price direction. Figure 4: Metastock Showing Trend Analysis of FIRST BANK Share Price over One Year Source: Metastock Contacts: For enquiries. This suggests low volatility as compared to FIRST BANK’s normal range. The bank made N42. Analysis. we observe that the RSI is not currently in a topping (above 70) or bottoming (below 30) range. Stadium Road. No responsibility or liability is accepted for error of fact or any opinion expressed herein INVESTMENT BANKING| SECURITIES TRADING | ASSET MGT. This indicates that. The Bollinger Bands are 9. we observe that the recent price action of FIRST BANK around the bands compared to the action of Relative Strength Index does not present any probability of failure at this time..43 as a result of simple average of several valuation methodologies. compared with N193. 2011 . Victoria Island. Tel: 01-2718630 Abuja: 16 Adetokunbo Ademola Crescent Wuse. please call Lanre Bakare on +234 702 939 0488 or Wale Alabi on +234 702 939 0490 or Innocent Nwani on +234 702 939 0525 3|Page FIRST Bank Plc I October. We arrived at an intrinsic value of N12. Zone 2 Abuja. Lagos. it is neither overbought nor oversold. Tel: +234 (0) 702 939 0541 Port Harcourt: Kabiat Plaza.89 per cent to N230. Technical Analysis Metastock technical analysis: Using the Bollinger Bands as an indicator of price direction.825 billion PAT in FY 2011 higher than N33. Tel: +234 (0) 702 940 5992 Onitsha: 4.A. Ridge Road.72 per cent at the end of the year 2010 to N33.606 bn. Off Adeola Odeku.966 bn in parallel period of 2009 (Table 1).901 bn in the corresponding period of 2009. G. It is not currently showing any failure swings.PanAfrican Research Performance Analysis The applauded growth of the bank is currently being appreciated by all stakeholders.40 percent narrower than normal. Elsie Femi Pearse. Anambra State Tel: +234 (0) 702 939 054 This report is produced by PanAfrican Capital Markets Plc as a guide for clients that intend to invest in Securities on the basis of their own investment decision without relying completely on the information contained herein.R.890 billion PAT in Q3 2011 which we expect to recline at N37. 2010 indicates that its Gross earnings grew by 18. Clear evidence of improvements in the key performance indicators confirm that the bank’s commitment to return value to shareholders is on a sustainable basis. Taking into cognizance the present challenges in the banking sector. Return on Earnings (ROE) and Net profit Margin (NPM) of First Bank are very competitive as they are higher than the industry averages. we stay by our forecast (E*) in table 1 and table 5.411bn from N4. The Profit after Tax surged by 581. Rivers. We recommend BUY for the stock at the current market price for investors to harvest the perceived rewards. was a BUY.411 billion PAT made in FY 2010. The full year results of First Bank Plc for the period ended 31st December. The recent price action around the bands compared to the action of Relative Strength Index does not suggest robust trading opportunities in the near-term. The last RSI signal (13 periods ago). Plot 69. Valuation and Recommendation The Bank’s plans to further consolidate its footprint within and outside Nigeria and diversify its assets will increase liquidity in the bank and that could translate into a thrilling dividend payment to investors. | STRUCTURED FINANCE | REGISTRAR SERVICES For further enquiries.

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