As the dust settles on the financial crisis which brought banks to their knees, the banks appear to be emerging stronger from the debris of huge non-performing loans (NPLs), as they post impressive financial results with some of them actually paying dividend and giving out bonus shares to existing shareholders.
Based on the release of financials by the banks, the stock market reacted yesterday, gaining 1.75 percent. The All Share Index closed at 24,555 points. Specifically, GTBank was the highest gainer in the banking sub-sector adding 0.95 kobo to close at N19.95 kobo. Access Bank also rose to N8.99 kobo after gaining 0.42 kobo. Zenith Bank gained 0.73 kobo to close at N15.43 kobo.
Beating analysts’ expectations, the three banks that released their full year financial results for the uniform period ended December 2010 all recorded impressive pre-tax profits, ranging from 42 percent to 564.46 percent.
Although earnings dropped in all three banks, Zenith Bank recorded a 42 percent increase in its profit before tax from N35.9 billion in 2009 to N50.03 billion in 2010. GTBank’s earnings rose by 73.28 percent from N27.96 billion in 2009 to N48.46 billion in 2010, and Access Bank’s went up by 564.46 percent from a loss of N3.48 billion in 2009 to a profit before tax of N16.17 billion in 2010.
The banks recorded impressive growth in their pre-tax profits, even as growth in loans and advances, one of the core businesses of banks, was marginal. Loans and advances by Zenith Bank only grew by 2.14 percent from N698.33 billion in 2009 to N713.29 billion in 2010. GTBank’s loan portfolio went up by 5.34 percent from N563.49 billion in 2009 to N593.56 billion in 2010, while that of Access Bank went up by 11.99 percent from N383.78 billion in 2009 to N429.78 billion in 2010.
Wale Abe, chief executive officer of the Financial Market Dealers Association of Nigeria (FMDA) who spoke with BusinessDay in a telephone interview, said what is happening sign-posts better things to come. According to him, when the financial institutions are strong, it is good for the economy because banks, anywhere in the world, are the drivers of the economy.
Concerning the fall in the banks’ gross earnings, Abe said earnings have reduced because the volume of business banks do has reduced. He further went on to explain that the volume of business has fallen because the level of inefficiency has also reduced drastically because all loopholes have been blocked.
Bolaji Balogun, managing director of Chapel Hill , simply said it’s a “stellar performance”. Victor Ndukauba, an analyst with Afrinvest who spoke with BusinessDay, said: “The spike in both pre-and post-tax earnings (which were 10.0 percent below and 1.0 percent above our forecasts, respectively) was pretty much in line with their expectations”.
Ndukuaba said Access Bank has been able to achieve decent growth in gross earnings (6.0 percent below our 2010 full year forecasts) based on its singular drive to sustain a circa 10.0 percent growth in credit, albeit with enhanced focus on only top-notch borrowers and, by extension, asset quality. This was pretty much against the run of play, given the general decline in risk asset creation by Nigerian banks in 2010.
Adesoji Solanke, an analyst with RenCap Group, said he sees the logic in Nigerian banks finalising their balance sheet cleansing in the aftermath of the crisis, with the full financial year 2010 results, as this would place the banks on a clean pedestal going into 2011, and effectively put paid to the days of provisioning surprises.
Abiola Rasaq, an analyst with Vetiva Capital Management Limited, said that these banks’ financials are good numbers; adding that the market will continue to react positively to these results.
Access Bank is the only bank among the three that witnessed growth in gross earnings. Its earnings went up 7.25 percent from N84.98 billion in 2009 to N91.14 billion in 2010, while Zenith Bank’s earnings fell 30.58 percent from N277.3 billion in 2009 to N192.49 billion in 2010, and GTBank’s earnings fell 5.32 percent from N162.55 billion in 2009 to N153.91 billion in 2010.
Zenith Bank is proposing a dividend of 85 kobo per share, while GTBank is paying a dividend of 75 kobo per share and a bonus of one share for every four shares held by shareholders of the bank. Access Bank is paying 30 kobo per share to its shareholders.
In spite of the peculiar environment in which the banks operated during the period under review, all three banks witnessed growth in deposits.
Based on the release of financials by the banks, the stock market reacted yesterday, gaining 1.75 percent. The All Share Index closed at 24,555 points. Specifically, GTBank was the highest gainer in the banking sub-sector adding 0.95 kobo to close at N19.95 kobo. Access Bank also rose to N8.99 kobo after gaining 0.42 kobo. Zenith Bank gained 0.73 kobo to close at N15.43 kobo.
Beating analysts’ expectations, the three banks that released their full year financial results for the uniform period ended December 2010 all recorded impressive pre-tax profits, ranging from 42 percent to 564.46 percent.
Although earnings dropped in all three banks, Zenith Bank recorded a 42 percent increase in its profit before tax from N35.9 billion in 2009 to N50.03 billion in 2010. GTBank’s earnings rose by 73.28 percent from N27.96 billion in 2009 to N48.46 billion in 2010, and Access Bank’s went up by 564.46 percent from a loss of N3.48 billion in 2009 to a profit before tax of N16.17 billion in 2010.
The banks recorded impressive growth in their pre-tax profits, even as growth in loans and advances, one of the core businesses of banks, was marginal. Loans and advances by Zenith Bank only grew by 2.14 percent from N698.33 billion in 2009 to N713.29 billion in 2010. GTBank’s loan portfolio went up by 5.34 percent from N563.49 billion in 2009 to N593.56 billion in 2010, while that of Access Bank went up by 11.99 percent from N383.78 billion in 2009 to N429.78 billion in 2010.
Wale Abe, chief executive officer of the Financial Market Dealers Association of Nigeria (FMDA) who spoke with BusinessDay in a telephone interview, said what is happening sign-posts better things to come. According to him, when the financial institutions are strong, it is good for the economy because banks, anywhere in the world, are the drivers of the economy.
Concerning the fall in the banks’ gross earnings, Abe said earnings have reduced because the volume of business banks do has reduced. He further went on to explain that the volume of business has fallen because the level of inefficiency has also reduced drastically because all loopholes have been blocked.
Bolaji Balogun, managing director of Chapel Hill , simply said it’s a “stellar performance”. Victor Ndukauba, an analyst with Afrinvest who spoke with BusinessDay, said: “The spike in both pre-and post-tax earnings (which were 10.0 percent below and 1.0 percent above our forecasts, respectively) was pretty much in line with their expectations”.
Ndukuaba said Access Bank has been able to achieve decent growth in gross earnings (6.0 percent below our 2010 full year forecasts) based on its singular drive to sustain a circa 10.0 percent growth in credit, albeit with enhanced focus on only top-notch borrowers and, by extension, asset quality. This was pretty much against the run of play, given the general decline in risk asset creation by Nigerian banks in 2010.
Adesoji Solanke, an analyst with RenCap Group, said he sees the logic in Nigerian banks finalising their balance sheet cleansing in the aftermath of the crisis, with the full financial year 2010 results, as this would place the banks on a clean pedestal going into 2011, and effectively put paid to the days of provisioning surprises.
Abiola Rasaq, an analyst with Vetiva Capital Management Limited, said that these banks’ financials are good numbers; adding that the market will continue to react positively to these results.
Access Bank is the only bank among the three that witnessed growth in gross earnings. Its earnings went up 7.25 percent from N84.98 billion in 2009 to N91.14 billion in 2010, while Zenith Bank’s earnings fell 30.58 percent from N277.3 billion in 2009 to N192.49 billion in 2010, and GTBank’s earnings fell 5.32 percent from N162.55 billion in 2009 to N153.91 billion in 2010.
Zenith Bank is proposing a dividend of 85 kobo per share, while GTBank is paying a dividend of 75 kobo per share and a bonus of one share for every four shares held by shareholders of the bank. Access Bank is paying 30 kobo per share to its shareholders.
In spite of the peculiar environment in which the banks operated during the period under review, all three banks witnessed growth in deposits.
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