Abbey Bank to adopt digital first strategy as it transitions to commercial banking

Abbey Bank Plc, originally known as Abbey Mortgage Bank Plc, has successfully eliminated its non-performing loan ratio, which plummeted from approximately 80% to zero, as it shifts its focus to commercial banking, according to recent reports from Lagos. The bank's Managing Director and CEO, Mobolaji Adewumi, announced this development during a media briefing, revealing that the current leadership inherited a considerable amount of legacy debts upon assuming office in 2020.

Some of these loans can be traced back to as early as 2007 and 2008, necessitating negotiations with borrowers and the recovery of collateral assets. Adewumi emphasized that Abbey Bank has implemented stricter lending procedures to prevent the recurrence of the financial challenges experienced with its previous loan portfolio, leading to profitability within three years of management changes.

The decision to pivot away from mortgage banking was a result of a thorough assessment of financing opportunities within the housing value chain, encompassing property developers, building material suppliers, importers, and other related industries. This strategic shift will also enable the bank to address the high cost of funds that have previously limited mortgage lending by diversifying its funding options, such as retail deposits.

As Abbey Bank enters the commercial banking arena, it plans to integrate digital banking with a physical presence through eight anticipated locations. Adewumi also mentioned that the bank has recruited experts in treasury, trade finance, corporate banking, retail banking, electronic banking, and risk management to support its new operations.

Executive Director of Business Development, Dipo Adeoye, stated that the bank will need to establish a unique competitive edge in a market dominated by larger financial institutions. To achieve this, Abbey Bank intends to leverage its mortgage financing expertise while expanding its digital services, physical presence, and lending to businesses throughout the housing value chain.

John Okonkwo, Executive Director of Finance, Risk, and Operations, highlighted that the bank's enhanced risk management framework has been instrumental in maintaining a robust loan portfolio. Okonkwo also announced the introduction of an investor relations framework to facilitate communication with minority shareholders, allowing them to raise concerns and access pertinent information.

The board comprises three independent non-executive directors, ensuring a diverse and impartial oversight.

In June 2023, Nairametrics reported that Abbey Mortgage Bank Plc had obtained regulatory approval from the Central Bank of Nigeria (CBN) to transition into a commercial bank. Earlier this year, shareholders approved a N164.5 billion private placement and authorized the board to raise an additional N100 billion through various equity and debt instruments, contingent upon regulatory approvals.