Most commercial banks operating in the country defied severe macro economic headwinds and tight regulatory policies by the Central Bank of Nigeria (CBN), as 12 of the banks out of the 15 quoted on the floor of the Nigerian Stock Exchange (NSE) recorded a total profit after tax (pat) of N458.96 billion for the third quarter that ended on September 30, 2016.
This amount represents an increase of 9.2 percent compared to N420billion profit recorded by the same banks in the corresponding period of 2015.
However, the likes of First City Monument Bank Group Plc, Stanbic IBTC Group Plc and Skye Bank Plc delayed submitting their third quarter results for the period under review.
According to investigations, seven out of the 12 banks recorded decline in profit, attributable to low gross earnings generation, impairment charges for credit losses and hike in operating expenses.
Details of the results showed that Diamond Bank Plc recorded the highest decline in its profit as it fell by 78 percent from N15.9billion recorded in Q3 2015 to N3.5 billion in Q3 2016.
It was closely followed by Unity Bank Plc that recorded 63.2 percent decline in profit from N9.3 billion in Q3 2015 to N3.4 billion in Q3 2016; while Sterling Bank Plc’s profit was down by 27 percent from N7.5 billion in Q3 2015, to N5.5 billion in Q3 2016.
According to the results, Fidelity Bank Plc and First Bank of Nigeria Holdings Plc recorded a decline of 24 percent and 15.3 percent in profit in the period under consideration, with Fidelity Bank’s profit moving from N11.4 billion in the previous year’s third quarter to N8.75 billion in Q3 2016, while First Bank of Nigeria Holdings’ profit dipped by 15.3 percent to N42.5 billion from N50 billion in Q3 2015.
Group Managing Director of First Bank of Nigeria Holdings’, Mr. UK Eke, said, the group’s performance had again demonstrated its underlying resilience despite the ongoing macroeconomic and business challenges. According to him, “Although the current currency weakness is a challenge for our remedial process, we are steadfastly progressing on improving the overall risk management culture, governance and technology as well as the degree of compliance across the Group”.
“The Group remains committed to ensuring sustained improvement in our performance with a view to restoring shareholder value.”
The group impairment charge for credit losses stood at N114.7 billion in Q3 2016 as against N46.6 billion in Q3 2015.
Ecobank had announced 15 percent decline in profit at N51.6 billion from N60.4 billion in Q3 2015 while Wema Bank Plc recorded marginal decline in profit from N1.3 billion to N1.27 billion in Q3 2016.
Statistics gathered by our correspondent showed that Guaranty Trust Bank Plc recorded the highest profit after tax of N119.9billion, representing a 60 per cent rise over N75.16 billion in Q3 2015.
The Managing Director/CEO, Segun Agbaje, had said that “The Bank’s strong performance is a reflection of the continued support of our customers, hard work of our Staff and the commitment of the Management and Board to manage the Bank for long term sustainable returns.
“Recognizing that we operate in challenging business environments, we set high goals, benchmark ourselves against global standards and aggressively pursue our key objectives for the year, which are focused mainly on adding value to all stakeholders and improving the customer journey.
He further stated that “As a Bank, we will continue to leverage collaborations and technology to drive customer engagement, improve the overall customer experience and grow our business for long term sustainable returns.”
Guaranty Trust Bank has continued to report the best financial ratios for a Financial Institution in the industry with a return on equity (ROE) of 35.31per cent, evidencing the efficient management of the banks’ assets
Union Bank Plc profit also gained 39.4 percent to N13 billion in Q3 2016 from N 9.3 billion in Q3 2015 while Zenith Bank Plc, with a profit after tax of N100.07 billion, came next, showing a 20.4per cent rise compared to N83billion profit in September last year.
Access Bank Plc’s profit increased by 19 per cent from N48.09 billion in Q3 2015 to N57.1 billion in Q3 2016 while United Bank for Africa recorded a marginal increase in profit from N48.6 billion to N52 billion, representing an increase of eight per cent.
A group of finance analysts at InvestmentOne explained that “We update our coverage on the Nigerian banking sector with a near term negative outlook.
“In our opinion, the sector will see limited growth in loan book as fragile macro environment inhibits lending. In addition, we expect further deterioration in asset quality, especially their oil and gas exposure with the free-fall in crude oil prices. This will negative-ly impact performances over the medium term, and may have a knock-on effect on ROE.
“In our opinion, bank’s interest income may come in uninspiring given the low interest rate environment and the muted growth outlook for the economy.
“While we see support from the government fiscal reforms and the proposed infrastructure spend, we are however concerned about the negative impact CBN’s foreign exchange management regime is having on the real sector of the economy,” they added.