Published On: Tue, Apr 15th, 2014


Strict regulation hurt banks’ profits in 2013 …As 8 struggled to earn N312.77bn PBT
Strong indications have emerged that strict regulatory environment crashed average profit of most Nigerian banks in 2013.

Investigations into the recently released 2013 financial results of 8 out of 21 banks revealed that the banks made a total of N312.77 billion profit before tax (PBT) in 2013. Stakeholders believe the amount which is only N37.56billion above N275.21billion PBT made by the same financial institutions in 2012 is not so impressive as it stands  over 4 times below the banks’ collective 2013 gross earnings of N1.4 trillion.
This is compared to N1.3 trillion gross earnings recorded in 2012.
All the eight banks declared impressive gross earnings in their 2013 year end reports, but profit before taxes and other metrics left much to be desired.
The results highlighted uptick in deposit growth, weak loan growths, jump in impairment charges, and non-performing loan (NPL) ratio improvements.
Industry watchers highlighted improved non-performing loan (NPL) ratio, pick-up in deposit growth in the fourth quarter, impressive dividend payout as encouraging points in the results, but stated that Net interest margin (NIM) (a measure of the difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders  were issues of concern.
Expressing concern over the impact of regulation on  FBN Holdings Plc’s third quarter results for 2013, Chief Executive Officer, Mr Bello Maccido said: “Over the first nine months of 2013, we began to see the impact of recent changes in regulatory policy on our business in particular, the increase in the minimum savings deposit rates as well as the removal of the ATM withdrawal fee.”
In its assessment of Access bank’s 2013 performance, Afrinvest (West) Africa Limited, a Lagos-based investment firm said it was less than impressive as the Bank struggled to grow top line while the bottom line dipped.
Gross earnings grew by as little as 0.1 per cent to N206.7billion in Financial Year (FY)2013 from N206.4billion in 2012, while Profit After Tax(PAT) declined by 7.7 per cent to N36.3billion in FY:2013 from N39.3billion in FY:2012.
“PBT declined 3.3 per cent to N45.0billion in FY:2013 from N46.5billion in FY:2012. As a result, the PAT and PBT margins both declined from 19.0 per cent and 22.5 per cent in FY:2012 to 17.6 per cent and 21.8 per cent in FY:2013 respectively,” the firm stated in a research note made available to Nigerian Tribune.

It said the resistance at the top line was engendered by the 11.7 per cent decline in interest income traceable to 20.9 per cent decline in investment securities.

The Bank also reported a Net Interest Margin (NIM) of 5.1per cent lower than the Tier 1 average of 6.5 per cent reported in Q3:2012 while its Cost to Income ratio rose to 73.0 per cent in FY:2013 from 60.5 per cent in FY:2012.

Similarly,pretax profit for Fidelity Bank Plc dropped by 58 per cent as it recorded N9.028 billion in its 2013 audited year end compared to N21.349 billion reported in 2012. However, the bank recorded a slight growth in gross earnings of 6.5 per cent in the audited year end of 2013 compared to  the same period of 2012.

The bank declared a dividend of 14 kobo per share to its shareholders, which is a 33.33 per cent decrease in dividend payment compared to 21 kobo paid in 2012.

Diamond Bank said its 2013 pretax profit rose to N32.1 billion ($194.5 million), lower than its guidance, but up 17 per cent from N27.5 billion a year ago.

Gross earnings at the bank rose to N143.12 billion  during the twelve months to December 2013 versus N112.35 billion the previous year, it said in a filing with the Nigerian Stock Exchange.

Also, Nigerian bank, FCMB, said  its 2013 pretax profit rose to N18.2 billion, from N16.2 billion the previous year.

Its gross revenues grew to N130.99 billion during the twelve-month period to December 2013, versus N116.83 billion the previous year, it said in a filing with the Nigerian Stock Exchange on March 28, while  proposing full-year dividend of N0.30 per share.


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