…As banks’ profits drop by N11.1bn
…Shareholders laud management for surviving tough times
By Peter Egwuatu
Shareholders of nine banks quoted on the Nigerian Stock Exchange, NSE received 42.2 per cent or N158.4 billion as Return on Investment, ROI , out of the total banks’ Profit After Tax, PAT, of N375.8 billion for the financial year, 2015. Financial Vanguard’s findings showed that the nine banks’ PAT declined by N11.1 billion or 2.9 per cent as they recorded a total of N375.8 billion for the financial year, 2015 when compared to the figure of N386.9 billion recorded in 2014.
The banks’ managements have decried the harsh operating environment and the risks that characterised the period under review as high operating cost impacted negatively to reduce profit margins . The nine banks which financial reports for the year under consideration were examined include: Access Bank Plc, Ecobank Transnational Incorporated, ETI Plc, Guaranty Trust Bank, GTBank Plc, Sterling Bank Plc, and United Bank for Africa, UBA Plc. Others are Zenith Bank Plc, Fidelity Bank Plc, Wema Bank Plc, and Union Bank Nigeria Plc.
Financial Vanguard’s findings further showed that Access Bank declared Profits After Tax of N65.9 billion, while it paid N15.2 billion as dividend; Ecobank Transnational Incorporated PAT was N21.3 billion and released N7.1 billion as dividend. GTBank posted N99 billion PAT, while it paid dividend of N51.33 billion. Sterling Bank recorded 10.3 billion, while its shareholders were paid N1.7 billion as dividend. UBA on its part declared N47.6 billion PAT, while it paid its shareholders N15.7 billion as dividend.
Zenith Bank was not different as it declared N98.8 billion, while it paid shareholders N62.8 billion as dividend. Fidelity Bank recorded N16.3 PAT, and paid N4.6 billion to shareholders as dividend. It was the same story for Union Bank which declared N2.3 billion PAT and declared no dividend, just as Wema Bank declared N13.9 billion without proposing any dividend to shareholders.
Further analysis showed that the nine banks’ reward to shareholders by dividend payout in 2015 grew by 18.8 per cent from N133.3 billion in 2014 to N158.4 billion. Zenith Bank paid the highest dividend in 2015 recording N62.8 billion compared to N54 billion in 2014, followed by GTBank, which recorded N51.3 billion as against N51.5 billion in 2014.
Others are UBA N15.7 billion as against N10.6 billion, Access Bank N15.2 billion as against N5.7 billion, Ecobank Transnational N7.1 billion as against nil in 2014, Fidelity Bank N4.6 billion as against N5.2 billion, Sterling Bank N1.7 billion as against N5.4 billion in 2014. Wema Bank and Union Bank did not declare dividend for the two year period.
Commenting on the performance of the banks for the financial year, 2015, Mr. Emeka Emuwa, Chief Executive Officer, Union Bank Nigeria, said: “2015 was a challenging year across board, with significant operational and economic headwinds. Notwithstanding the difficult operating environment, Union Bank maintained its focus on business and transformation initiatives, which yielded desired results.
Our gross earnings, excluding one-time gain on sale of subsidiaries, are up by 11 per cent compared to 2014. With the launch of a re-energised brand identity and a retail model focused on customer needs, we increased our customer deposits by 12 per cent year-on-year.
“Our simpler and smarter banking solutions have enabled us make strides in customer service delivery, which has reflected in independent industry surveys. We continue to strengthen our e-banking platforms as we acquire new customers and migrate existing ones to these platforms, realising increased gains in revenues and reducing service costs.”
Looking ahead, he said “With the operating environment expected to remain challenging, Union Bank remains focused on delivering quality financial services to our customers and value to all stakeholders. We believe we are well positioned to take advantage of opportunities in emerging sectors of the economy as well as deepen our stronghold in key geographies around the country.”
In his own comment on the result, Managing Director/Chief Executive Officer of Wema Bank Plc, Mr. Segun Oloketuyi, said, “Given the tough operating environment in the first half of 2015 attributable to economic headwinds, regulatory restrictions and political uncertainties, the Bank has been able to sustain its financial performance, albeit, on a lower level compared to the same period in 2014.
The first quarter of the year was characterised by election-related activities and political maneuverings with limited emphasis on economic matters, while the second quarter was largely characterised by the continued pressure on the currency, the tight monetary policy conditions and the low level supply of petroleum products. All these issues affected consumer discretionary spending and indeed the growth in our retail volumes.”
The Chairman of Access Bank, Mosun Belo-Olusoga, in his response said: “ Achieving sustained growth and profitability was a difficult task for Nigerian banks in 2015. The banking industry faced increased regulation and monetary tightening by the Central Bank, who during the first half of the year, actively sought to preserve the nation’s reserves and ensure exchange rate stability.
These efforts, coupled with macro inconsistencies, resulted in a landscape characterised by pressures on earnings and capital, stiffer competition for lower cost deposits and increased funding costs across the industry. Banks were more risk conscious, which translated to marginal asset growth on the back of lower oil prices and pressures on the foreign exchange market.”
Speaking on its own bank’s performance durig the year under review, the Managing Director/CEO of Guaranty Trust Bank Plc, Mr. Segun Agbaje said: “That the bank’s financial performance in 2015 is an indication that we have earned the loyalty of our customers and an attestation of the hard work and dedication of our staff, management and Board. The group has delivered a respectable Profit Before Tax of N120.7billion despite an extremely challenging business environment in 2015.
As a bank, we will continue to actively partner with our customers and grow our business in a sustainable manner that is not only driven by profit objective, but with an increased focus on empowering our customers with a view to growing Nigerian economy. Also, we remain committed to maximising shareholders’ value and delivering superior and sustainable returns whilst actively expanding our franchise in select, high growth African markets where we believe we have a competitive advantage.”
Also reacting, the Group Managing Director, UBA Plc, Mr. Phillips Oduoza, said, “Our 2015 profit is a new high, reflecting the hard work and discipline of our board, management and staff in creating value for all stakeholders. We remain committed to growing in a responsible manner that aligns with our vision of building an enduring institution.”
He said the bank’s resilient business model, geographic diversification, proactive strategies, and strong governance created an edge for it through the year. “We will continue to invest in our future whilst managing cost tightly to generate strong returns to shareholders,” he assured.
The Chairman of Progressive Shareholders Association of Nigeria, PSAN, Mr. Boniface Okezie said: “We must commend the banks operating in Nigeria for their resilience in this tough operating environment. The banks were operating on high costs as a result of lack of power and other infrastructure. The regulatory environment was also not friendly for the banks during the period under review.
Therefore, whatever dividend they gave us we appreciate and look forward to improved dividend when the economy bounces back. As the banks were able to reward us with 42 per cent of the profits made, we must commend them. Besides, given the insufficient liquidity in the economy, the banks have to plough back some percentage of profits made to continue business.”
Commenting as well, the President, Renaissance Shareholders Association of Nigeria, RSAN, Ambassador Olufemi Timothy said: “Our major concern is the cash dividend that we are getting from these banks. Since it is not the post-dated type of dividend where dividend declared takes longer period, we are satisfied with the portion of the profits given to us as reward for our investment.
It is not easy for the banks to even post profit let alone paying dividend. We as shareholders are calling on the federal government and the regulators to create favourable policies that will enhance liquidity and the economy in general. Government should fix power, roads, water and other infrastructure as the rate of inflation is on the alarming side.
“There is liquidity crisis and banks are going abroad to source for cheaper funds to enhance their capital and play their traditional role of lending, but they are facing lots of constraints. Now that the forex market is liberalised, we believe the capital market will firm up.” Commenting also, the Chairman of Proactive Shareholders Association of Nigeria, PSAN, Mr. Oderinde Taiwo, said: “Despite these challenges, banks that are able to manage their operations, record profit and declare dividends should be commended. I therefore believe the banks should be hailed.”