Nigerian Banks Displays Strong Profit Margins

It’s yet another strong showing by three of Nigeria’s leading banks, United Bank for Africa (UBA), Guaranty Trust Holding Company Plc and Fidelity Bank Plc in the first half of 2021, as the trio posted positive results, defying the country’s economic headwinds.

UBA in its half year results released last week, recorded 33.4 per cent growth in profit before tax to N76.2billion, up from N57.1billion in the same period of 2020, translating to an annualised Return on Average Equity of 17.5 per cent as against 14.4 per cent a year earlier.

The results filed with the Nigerian Exchange Group, showed that the Groups gross earnings grew 5.0 percent to N316billion from N300.6billion, while total assets rose to N8.3 trillion from N7.7trillion.

Customer Deposits also crossed the N6trillion mark growing by 7.4 per cent to N6.1trillion in the period under consideration, compared to N5.7 trillion as at December 2020.

The Groups Shareholders Funds remained robust at N752.5billionn up from N724.1billion in December 2020, reflecting its strong capacity for internal capital generation.

UBA Declares Dividends

In line with the banks culture of paying both interim and final cash dividend, the Board of Directors of UBA Plc has declared an interim dividend of 20kobo per share for every ordinary share of 50kobo each, held by its shareholders.

UBAs Group Managing Director/Chief Executive Officer, Mr. Kennedy Uzoka, expressed delight over the banks performance, adding, This has been a strong first half for us, as global economic recovery exceeded expectations, creating a positive rub-off on consumer and corporate confidence, savings and investment activities.

We saw this positively impact our business, as we continued to leverage our key strategic levers People, Process and Technology, and our Customer 1st Philosophy, to revolutionise customer experience at UBA.

UBAs Group Chief Financial Officer, Ugo Nwaghodoh, on his part, noted that the banks goal is to achieve marked improvement in earnings quality whilst maintaining positive operating leverage as well as top-notch asset quality.

GT Bank records decent performance 

On its part, Guaranty Trust Holding Company Plc, formerly Guaranty Trust Bank Plc, in its half year 2021 results, reported profit before tax of N93.1billion, representing a dip of 15.2% compared to N109.7billion recorded in the corresponding period of June 2020.

However, the Groups transactional income maintained an upward trajectory as shown in fees and commission income which grew by 44.7% from N26.5billion in H1 2020 to N38.3billion in H1 2021.

Overall, the results showed a decent performance across key financial metrics against the challenging business environment.

The structure and earning capacity of the Groups balance sheet remained resilient with total assets closing at N5.017trillion, primarily driven by a 4% increase in deposit liabilities from N3.611trillion in December 2020 to N3.755trillion in June 2021 and a slight dip in loans (net) by 1.8% from N1.663trillion as at December 2020 to N1.632trillion in June 2021.

Regardless, the dip in profit can be attributed to the present realities of the operating environment.

Full Impact Capital Adequacy Ratio (CAR) remained very strong, closing at 24.0%, while Asset quality was sustained as NPL ratio and Cost of Risk (COR) closed at 6.0% based on IFRS (6.8% based on CBN Prudential Guidelines) and 0.27% in June 2021 to 6.4% and 1.18% in December 2020, respectively.

Commenting on the financials, Mr. Segun Agbaje, Group Chief Executive Officer of Guaranty Trust Holding Company Plc said; The results reflect our commitment to building on our track record of solid financial performance, and our capability to constantly innovate will ensure we stay ahead of the curve at all times.

“We are counting on the enduring support of our loyal customers and the hard work of our dedicated staff to continually make end-to-end financial services easily accessible to everyone and to create the best outcomes for all our customers and the communities in which we operate.

He further stated that; Looking forward, we are focused on bringing to bear the full benefits of our new corporate structure by consolidating our leading position in all the economies where our franchise operates.

“We will also diversify our earnings from core banking, continue to empower businesses across Africa and beyond, and generate long-term returns for our shareholders.

Overall, Guaranty Trust Bank Plc continues to post one of the best metrics in the Nigerian Banking industry in terms of key financial ratios i.e. Post-Tax Return on Equity (ROAE) of 19.7%, Post-Tax Return on Assets (ROAA) of 3.2%, Full Impact Capital Adequacy Ratio (CAR) of 24.0% and Cost to Income ratio of 49.0%.

Guaranty Trust Bank Plc has been at the forefront of delivering innovative banking products and services to customers and superior Return-on-Equity (ROE) to shareholders.

It is widely regarded as the best managed financial institution in Nigeria and was recently recognized as Africas Best Bank and the Best Bank in Nigeria at the 2021 Euromoney Awards for Excellence.

Guaranty Trust Bank also retained its position as Africas Most Admired Financial Services Brand in the 2021 ranking of The Brand Africa 100: Africas Best Brands.

GT Bank proposes 30k dividends

Meanwhile, the bank has proposed an interim dividend of 30 kobo per 50 kobo ordinary share for the first half of the year ended 30 June, 2021.

The proposal is subject to appropriate withholding tax, with a qualification date of September 27, 2021.

On Tuesday October 12, 2021, the dividend which amounts to N8.83 billion will be disbursed electronically to ordinary shareholders whose names appear on the Register of Members as at Monday, September 27, 2021, and who have completed the e-dividend registration and mandated their Registrar to pay their dividends directly into their bank accounts. Holders of GTCOs GDR listed on the London Stock Exchange will also receive their dividend payment subsequently.

The holdco has 29,431,179,224 outstanding shares and a market capitalization of N797.58 billion as at the time of filing this report. The banks shares opened trading on 10th of September, 2021 at N27.10 per share.

Fidelity Bank grows PBT by 72.4% in H1, 2021

On its part, Fidelity Bank Plc., has posted a profit before tax (PBT) of N20.6 billion for the first half of the year, ended June 30, 2021.

This is according to the bank’s audited half-year (H1) results released to the Nigerian Exchange (NGX) Limited on Sunday in Lagos.

The Managing Director/Chief Executive Officer of Fidelity Bank, Mrs Nneka Onyeali-Ikpe, in her comments, said the bank’s PBT represented a 72.4 per cent growth when compared to N12.0 billion recorded in the comparative period of 2020.

She added that profit after tax (PAT) rose to N19.31 billion from N11.30 billion recorded in the corresponding period.

According to her, the growth was on the Back of Increased customer transactions and improved operational efficiency.

“We sustained our impressive financial performance with double-digit growth in profit as increased customer transactions drove non-interest revenue while improved operational efficiency continued to moderate cost-to-serve,” she said.

Onyeali-Ikpe also said that the financial result for the period indicated that Gross Earnings increased by 6.2 per cent Year-on-Year (YoY) to N112.3 billion on account of 27.8 per cent growth in Non-Interest Revenue (NIR) to N23.8 billion from N18.1 billion in H1 2020.

She added that the bank’s NIR was driven by strong growth in commission on banking services by 57.7 per cent, account maintenance charges by 50.6 per cent, digital banking income by 49.4 per cent and trade income by 33.7 per cent among others.

Total customer induced transactions across all distribution channels increased by 58.0 per cent YoY and 21.2 Per cent QoQ.

The bank showed a good appetite in funding the real sector with net loans and advances increasing by 15.8 per cent YTD to N1.53 billion from N1.32 billion in 2020FY.

However, the actual growth was 14.7 per cent while the impact of the currency adjustment (2020FY: N400.3/dollars-H1 2021: N410.6/dollars) accounted for a 1.1 per cent YTD growth in the loan book. Cost of risk came in at 0.3 per cent and the NPL ratio (stage 3 loans) dropped to 2.8 per cent from 3.8 per cent in 2020FY.

Other regulatory ratios remain well above the minimum requirement: capital adequacy ratio at 18.8 per cent from 18.2 per cent in 2020FY.

Total Deposits increased by 16.5 per cent YTD to N1.98 billion from N1.69 billion in 2020FY, driven by increased deposit mobilisation across all deposit types.

“Digital Banking gained further traction as we now have 55.1 per cent of our customers enrolled on the mobile/internet banking products and 89.3 per cent of customer-induced transactions were done on digital platforms.”

She also explained that the bank’s foreign currency deposits increased by 23.1 per cent YTD at 149 million dollars and now accounted for 18.5 per cent of total deposits from 17.5 per cent in 2020FY.

According to her, this is as the bank continues to harness the benefits of its renewed drive in the diaspora banking space.

“We look forward to sustaining the current momentum in H2 by optimising our balance sheet and lowering our cost–to–serve.

“This will translate to improved earnings while we remain committed to our medium to long-term strategic objectives,” Onyeali-Ikpe said