Tokunbo Abiru’s tenure as the Group Managing Director/Chief Executive Officer, Polaris Bank Limited was remarkable. The bank chief who retired on Monday provided the leadership needed by the top lender to compete favorably in the marketplace . The bank chief left at a time the ovation was loudest after he successfully executed a transformation plan that delivered N27.83 billion profit before tax for the bank during the 2019 financial year.
Providing leadership in a top tier Nigerian bank is by no means a small feat. The job of a bank’s Chief Executive Officer becomes even tougher when the lender in question is at crossroad. That was the case with Polaris Bank Limited when its Group Managing Director/Chief Executive Officer, Tokunbo Abiru, who retired on Monday took over the leadership of the bank. But over four years after, he set the Systematically Important Bank on a path of speedy growth and profitability.
His retirement will take effect from tomorrow after about 29 years in the banking sector, serving in different capacities. His time at Polaris Bank was perhaps the most defining part of his 29-year banking career. On July 4, 2016, precisely, the Central Bank of Nigeria (CBN) appointed him to lead the defunct Skye Bank Plc out of insolvency. With other professionals on the board of the bank, Abiru has successfully led transformation of the defunct bank to become Polaris Bank in four years.
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With its profit before tax standing at N27.83 billion at the end of the 2019 financial year, Abiru and his team have returned Polaris to profitability in line with the mandate the apex bank set for the new management.
He provided synopsis of how he transformed Skye Bank to Polaris Bank in a short note he sent to his friends and associates, announcing plan to bow out of the bank. Specifically, Abiru wrote: “With the support of the Board and Executive Management of Polaris Bank and by God’s grace, I have delivered on the Central Bank of Nigeria’s mandate to stabilize and establish the Bank on the path of sustainable profitability.
“Polaris Bank is today a digitally enabled, customer-friendly and forward-looking enterprise, which has secured its rightful place in the vanguard of Nigeria’s banking industry. What remains outstanding is the divestment of government ownership from the bank to suitable investors in order to further solidify the journey on the path of continuous growth.”
Return to Profitability
From the abysmal records of its precursor, Polaris has come out stronger under its new management, now performing impressively and lucratively as much as other banks that are not in crisis. The bank’s first audited report bears witness to positive change a management structured around sound corporate governance can bring about.
Under his leadership, undoubtedly, Abiru has changed the narrative of Polaris Bank from pessimism to optimism, more aptly from liability to profitability. In its audited report, Polaris posted N27.35 billion profit after tax in the 2019 financial year. In terms of profits after tax, relatively, Polaris performed much better several other banks in the country.
Besides its comfortable return to profit, Polaris reported N857.86 billion total deposits in the 2019 financial year, a major feat most banks of its status could not record.
Likewise, its return on assets was quite impressive in the year under review. In terms of return on equity, Polaris reported 33 per cent. From available records, most Tier I banks did not post better returns on equity than the bridge bank.
At the end of the financial year, Polaris’ capital adequacy ratio stood at 14 per cent while its liquidity at 81 per cent. These ratios are well above regulatory requirements, thereby demonstrating a strong return to prudential compliance and providing assurance of a strong capital buffer and careful liquidity management to customers and regulators. With respect to its cost-to-income ratio, Polaris recorded 59 per cent, a positive record when compared to records of other banks.
Challenges of Transformation
Without result-oriented management, Polaris would not have been able to transit from liability to profitability, only in four years of its transformation. This perhaps justified the decision of the apex bank to appoint Ahmed as the Chairman of Polaris Board; Abiru as its GMD/CEO and other reputable professionals as executive and non-executive directors to pull the bank from the brink of outright collapse.
At its takeover, a failure of corporate governance was one of the bank’s major problems. This was evident in what the new management described the bank’s high level of non-performing insider-related loans. By implication, its funding structure and risk asset portfolio mix signified improper risk management exposing it to policy and currency risks.
Also, reports of forensic audits, which reputable accounting were engaged to conduct, revealed significant infractions under the bank’s previous managers. As a result, Polaris suffered significant deposit attrition. Customers, depositors, shareholders and institutional partners alike doubted its future when the apex bank announced its take-over on July 4, 2016.
Under Abiru, however, the new management managed the bank’s grievous challenges, which culminated in reduction of deposit loss, restoration of customer confidence and stabilisation of the bank. Also, it settled many matured trade and expired bilateral obligations and restructured outstanding balances with the relevant institutions and counterparties.
Abiru’s team, substantially addressed the challenges of loan security inadequacy and improper collateral documentation in the legacy portfolio of the bank. It equally cleaned up loan and collateral documentation on most of the high value facilities, thereby putting the bank in a stronger position to enforce its rights as a lender.
With its aggressive loan recovery drive, the bank recovered over N60 billion of outstanding bad loans within Abiru’s first year in office. Under Abiru’s leadership, records showed, loan recovery rose to N100 billion at the end of the second year. Also, it reached settlement and restructuring agreements with many of the chronic bad debtors resulting in substantially improved payments and prospects of future recoveries.
Abiru, likewise, pursued other initiatives to restructure and reposition the bank based on its mandate including cost management and optimisation and divestments to improve the institution’s financial position. Among others, cost management initiatives include branch rationalisation, review of service contracts and cash management operations all of which have resulted in hundreds of millions of financial savings.
Repositioned for Future
Now on a strong foothold, the bank has been repositioned as a major player in Africa’s biggest economy with over 370 branches nationwide.
Already, the bank has been restructured for sustainability. At the beginning of the 2020 financial year, Abiru reeled out future plan for the bank in a note to its staff members nationwide. He wrote in part: “2018 was pivotal in the life of the bank with the transition from Skye to Polaris. 2019, however, is even more important as we commence the journey of truly building a bank and brand we will all be proud of in years to come.”
“I am confident our bank has indeed stabilised and is now headed towards our purpose, which is to become a top retail bank” in Nigeria. This was demonstrated by our collective and sustained performance trajectory in 2019. Our prudential ratios-capital adequacy and liquidity ratios are now in full compliance with stipulated regulatory requirements.
“We returned to profitability on a month-on-month basis throughout 2019. Our cost-to-income ratio is also in line with industry average. We aggressively pursued our IT infrastructure refresh with a view to replacing and upgrading the aged, obsolete and sub-optimal performance IT equipment. The impact on efficiency, effectiveness, transactions and customers’ experience will become noticeable from the end of the first quarter of 2020…”
With this impressive performance, therefore, Abiru laid out strategic initiatives for the bank’s future growth. He cited the bank’s digital transformation, which had begun with recruitment of professionals and setting up of structures and systems. He cited the bank’s agency banking platform, an initiative designed to provide banking services to the unbanked and under-banked, especially in locations where the bank is not present.
Confident of taking the bank to an enviable status in the nearest future, Abiru reaffirmed his resolve to execute its corporate transformation plan, which according to him, was designed to provide direction for the bank into the future and define its corporate and strategic aspirations.
