UBA, Zenith, GTB, 2 others lead banking sector

…declares N321.33 billion combined profit

By ODUNEWU SEGUN

AS the brunt of the economic downturn and the debilitating cash squeeze in the country continue to impact negatively on Nigerians and businesses, five commercial banks have come out unscathed, posting profits despite the economic crisis facing the country.

Out of the 15 banks quoted on the Nigerian Stock Exchange, 10 have released their 2015 annual financial statements with the United Bank for Africa Plc, Zenith Bank Plc, Guaranty Trust Bank Plc, Access Bank Plc and Sterling Bank Plc coming out top.

While the combined profits of Ecobank, Union Bank Plc. FCMB Limited, Wema Bank Plc. and Fidelity Bank Plc. fell from N107.279 billion in 2014 to N59.73 billion in 2015, UBA, Zenith, GTB, Access and Sterling Bank posted a combined profit after tax of N321.33 billion.

The reports on the NSE website showed that Ecobank posted a PBT of N40bn in the 2015 financial year; Union Bank, N18.1bn; FCMB, N2.5bn; Fidelity Bank, N14bn; and Wema Bank, N3.046bn.

As for the five successful banks, Sterling Bank’s PBT rose from N10.7bn in the previous year to N11bn in 2015, while its PAT rose from N9bn to N10.3bn; UBA’s PBT rose from N42.4bn to N50.8bn, while its PAT rose from N40bn to N47.6bn; and Zenith Bank’s PBT rose from N107bn to N115bn, while the PAT increased from N92.5bn to N98bn.

While the underperforming banks have blamed their woeful performance on bad loans, naira volatility and other economic headwinds, theses five banks that outperformed the market attributed their successes to ingenuity on the part of their management.
For instance, during its last AGM in Lagos, the Group Managing Director/CEO, UBA Plc, Phillips Oduoza, said the result was a new high that reflected the hard work and discipline of its board, management and staff in creating value for all stakeholders.

He said the bank’s business model was aimed at promoting geographic diversification through proactive strategies and strong governance to create an edge for it through the year.

“We improved on our balance sheet management and pricing, thus ensuring a strong 19% growth in interest income as well as an enhanced net interest margin of 6.3%. Our improved service delivery and customized offerings helped in growing transaction banking volume, with attendant fee income,” he said.

For Access Bank whose profits after tax appreciated to N66 billion against N30 billion achieved in 2014, the Group Managing Director, Herbert Wigwe attributed the growth despite the harsh economic situation to the bank’s diversified business model and robust risk management framework.

He said the bank successfully raised capital by way of rights issue which strengthened its capital base and provided headroom to harness opportunities in key growth sectors of the economy.

“We also made remarkable headway in redesigning our systems and processes to enhance service delivery across all customer touch points, with emphasis on tailored customer interactions.

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Similarly, Mr. Yemi Adeola, Managing Director/ Chief Executive, Sterling Bank Plc attributed the rewarding performance of the bank in its 2015 financial year report to operating efficiency, which saw decline in operating expenses and boost in profit and loss lines.

He said “Clearly, our 2015 performance offered a clear validation of the underlying resilience of our business model. The very challenging operating environment notwithstanding, we managed to and continue to maintain a delicate balance between delivering on near term goals and laying the foundation for the future that we see one where our customers enjoy the experiences that we create together, which in turn becomes the basis for our long term profitability.

For the other five banks that underperformed in the financial year ended 31st of March, 2016, economic analyst and Chief Executive Officer, High Cap Securities, Mr. David Adonri, said the decline in profits was traceable to ineffective risk management practice in some of the banks and low activities in 2015 due to the political transition, among other variables.

“The banks are exposed to so many sectors of the economy with many of them being overexposed to the oil and gas sector; most of them have had their fingers burnt and have had to make major provisions for bad loans.”

According to him, this tells on banks risk management activities, differentiating between those who posted increase and decrease in profits.

The five remaining banks out of the 15 listed on the NSE, which have yet to file their 2015 financial reports are; First Bank of Nigeria Limited, Skye Bank Plc, Diamond Bank Plc, Stanbic IBTC Holdings Plc and Unity Bank Plc.

They have filed notices of delay in filing their 2015 annual reports, stating various reasons. They are expected to release the results before May ending.

Already, Skye Bank Plc and First Bank of Nigeria Limited has issued profit warnings ahead of the release of their results. They said high impairment charges due to non-performing loans would lead to major decline in their profits.