Tracking the giant strides of Bank of Industry

When the Bank of Industry announced the growth of its asset base beyond the N1 trillion mark, it was a historic achievement among development finance institutions in the country. With the announcement in 2018, came high expectations of the bank’s growth trajectory in the years ahead.

“For the first time in the bank’s history, we surpassed N1 trillion in asset base. The group’s profit was over N36 billion. For a bank that is owned by the government, it is a very good result,” Kayode Pitan, the managing director, said.

The bank’s chairman, Aliyu Abdulrahman Dikko, confirmed the achievements in his details of the bank’s financial results, which included: a 30 percent increase of N36.7 billion profit before tax compared to the N26.4 billion made in 2017; a growth of the group’s total assets by 49 pe cent to N1.07 trillion from N713.3 billion in 2017; as well as improvement in total equity which increased by 12.5 percent year-on-year to N258.3 billion from N241 billion in the previous year.

However, the high hopes of the bank to build on these achievements and its resilience were soon to be tested in a global economic storm with strong headwinds.

In 2020, the national economy shrank by 1.8%, its most profound decline since 1983. The COVID-19 crisis drove the economic slowdown and intensified risk aversion. This was heightened by low oil prices and shrinking foreign remittances.

With economic activities grounded by COVID-19 and many businesses struggling for survival, the Bank of Industry, as a development financial institution catering to thousands of micro, small, and medium enterprises (MSMEs) as well as large enterprises, came under additional pressure because it also had to support its numerous customers to survive.

Despite these challenges, by 2022, the bank’s financial results and further achievements told the story of resilience and remarkable success, of its board and management.

2022 results

The BOI continued its consistent trend of reporting appreciable growth in major financial indices on a year-on-year basis, thus consolidating its position as Nigeria’s largest and most impactful development finance institution.

Gross earnings grew by 15.4 percent to ₦212.96 billion in 2022 from ₦184.55 billion in 2021. Also, interest income improved by 21.1 per cent in 2022 to ₦212.96 billion from ₦175.83 billion in the previous year. Revenue from customer loans and investments was responsible for this growth.

Profit before tax improved by 15.6 percent to ₦71.99 billion in the year from ₦62.28 billion in 2021. A remarkable growth in interest income and other income lines, alongside the reduction in impairment charges, facilitated this appreciable growth.

Total equity grew by 11.7 percent to ₦429.83 billion from ₦384.85 billion in 2021, while loans and advances improved by 3.2 percent to ₦805.46 billion from ₦780.48 billion in 2021.

The Pitan Years

Since his commencement in 2017, the leadership of Kayode Pitan has demonstrated commitment and innovativeness that has improved the bank’s fortunes.

* The bank’s total assets have grown by an impressive 248% between 2016 and 2022, reaching ₦1.71tn by the end of 2021 and closing at ₦2.38tn as of December 2022.

* BOI has also grown its equity position by 95% since 2016 – from ₦220bn to ₦430bn ($935mn) in December 2022, exceeding the regulatory requirement of ₦ 10bn ($ 26mn) for retail DFIs.

* Profit before tax (PBT) jumped by 325% between 2016 and 2022, from N17bn to N72bn. The bank has contributed to the national budget by paying dividends of approximately N28.9bn and taxes amounting to N30.4bn. Generally, the bank typically distributes 15% of its net income as dividends.

* With over 85% of loans backed by a guarantee and with aggressive recovery efforts, the Bank has historically been able to maintain a non-performing loan (NPL) rate below the regulatory threshold of 5%

A fundamental enabler of this sterling financial performance is the successful conclusion of key capital-raising transactions from the international financial market by the bank. Under Pitan, from 2017 to date, BOI has raised over $5 billion from the international financial markets.

The first of the transactions was a $750 Million syndication concluded in 2017 with the support of Afreximbank and a team of international financial institutions (now fully paid off). The second and third were the €1 billion syndication that closed in March 2020 and another $1 billion syndication that closed in December 2020 (to be fully paid off by December 2023). The bank’s maiden Eurobond of €750 million, concluded in February 2022 was the fourth transaction. This transaction marked the first of its kind in several ways to the bank, Nigeria and Africa. This deal was the bank’s first Eurobond transaction and the first Euro-denominated Eurobond transaction in Nigeria. The transaction was also the first Eurobond transaction covered by Nigeria’s sovereign guarantee.

It, therefore, represents a benchmark for other prospective issuers from the African continent. It earned the bank the Agency Bond Deal of the Year award at the 2023 awards of the Bonds, Loans and ESG Capital Markets in Cape Town, South Africa.

The fifth capital raising transaction was the €1 billion guaranteed senior loan facility concluded in August of 2022. This deal also represents the first of its kind, by any Nigerian financial institution, both in terms of its size and structure. Through this transaction, the bank raised liquidity at affordable rates and diversified its funding sources by attracting new lenders at a time when the international capital markets were prohibitively expensive and shut to many borrowers.

A €100 million line of credit from the French Development Agency (AFD) was also concluded in August 2022 representing the sixth capital raising. Through this credit facility, the bank can expand its financing interventions in environmentally friendly and green projects. A grant of €2.5 million was also included in this deal to support capacity building for both our staff and customers.
Regarding developmental impact, BOI disbursed the sum of ₦210.7 billion to 418,436 beneficiaries in the year through its direct and indirect lending platforms and through funds that it manages on behalf of its strategic partners.

The bank’s intervention programmes, which traversed several sectors and segments of the Nigerian economy, did not only contribute significantly to our national goals of economic recovery and millions of job creation but also empowered Nigerian businesses, especially micro, small and medium enterprises, to remain in operations sustainably.

BOI has disbursed over N418 billion to 41,654 beneficiaries in Food and Agro Processing, and about 88,700mt of rice and maize was produced.

Pitan attributes these and other achievements to the collective efforts of the Board, management and staff, his predecessors, its partner banks that provide credit enhancements and the unflinching support of its majority shareholders (the Federal Ministry of Finance Incorporated and the Central Bank of Nigeria), the Federal Ministry of Finance, Budget and National Planning and its supervising ministry, the Federal Ministry of Industry, Trade and Investment with whom it has a harmonious relationship.

Platforms For Government Programmes

The Bank of Industry is the implementing agency of many government programmes. They include the Government Enterprise Empowerment Programme (GEEP) and N-Power Social Investment Programmes, under which BOI facilitated the disbursement of ₦ 68.0bn ($188.5mn) to 2.9mn beneficiaries.

It has disbursed ₦569.3mn ($1.6mn) to 56,934 beneficiaries under the North-East Rehabilitation Fund (“NERF”) – BOI fund to rejuvenate the economies of the 6 States in North-Eastern Nigeria affected by the adverse impact of insurgency over the years.

Under the MSME Survival Fund Scheme (part of the Nigerian Economic Sustainability Plan), BOI facilitated the disbursement of the ₦75 billion MSME Survival Fund. To date, ₦66 billion ($156mn) has been disbursed to 1,258,188 beneficiaries under the scheme.

Others include:

* NEPC Export Expansion Facility – Over N22.3 billion disbursed to 1,309 SME beneficiaries.

* Nigeria Content Intervention Fund – Over $300 million was disbursed to local players in the oil & gas sector with no default.

* The bank is the executing agency for the FGN/Islamic Development Bank for BRAVE programme designed to increase female entrepreneurs’ economic opportunities, especially in conflict and social unrest.

* Also executing agency for FGN/World Bank $750 million Nigeria Covid-19 Action Recovery and Economic Stimulus (NG – CARES) Programme.

Awards And Recognitions

In six years of Pitan’s leadership, the Bank of Industry has received over 20 awards and recognitions, 12 of which were received in 2022, for outstanding performance and commitment to driving economic growth in Nigeria.

They include the Award for Innovation in Financial Services, the African Banker Awards 2021; Award for Innovation in Financial Services, the African Banker Awards 2021; Award of Honour 2021 by the Manufacturers Association of Nigeria; and Best SME Funding DFI in Nigeria award at the All Africa Association for Small and Medium Enterprises.

Others are the Most Sustainable Bank Award at the 2022 World Finance Awards, October 2022; ‘Best SME Partner Bank of the Year’ by the European Magazine Global Banking and Finance Awards, October 2022; Best Development Bank Africa 2022 award’ at the International Banker 2022 Banking Awards, October 2022; and ‘Banking CEO of the Year, 2022’ by the European Magazine Global Banking and Finance Awards, October 2022.

Infrastructure Development

The bank continuously improves its internal processes for managerial efficiency. The number of BOI state offices/branches nationwide increased from 21 in 2016 to 31 in 2022. Last year, BOI completed the construction of BOI Tower 2 in Abuja, a thirteen-floor eco-friendly office complex with a six-level car park structure, to provide its workers with a modern and efficient workspace to better serve customers.

The bank’s stakeholders believe that the key to the list of achievements is the robust industrial harmony in the company. One senior staff member of one of the bank’s customers reportedly described Pitan as “an engaging and peaceful man, traits which are the hallmarks of his management style”.

However, Pitan also credits the bank’s board chairman for the growth-enabling climate in the bank. He describes him as “a calm and experienced team player, always eager for improvement and service to the country”.