15 quoted banks on the floor of the Nigerian Stock Exchange (NSE) has recorded a total profit after tax of N424.99 billion for the third quarter that ended on September 30, 2014.
According to investigation by LEADERSHIP, this represents an increase of N36.4 billion or nine per cent compared to N387.6 billion profit recorded by the same financial institutions in the same period of 2013 results.
Findings have showed that most of the Tier-II banks recorded impressive profit after tax unlike Tier-I banks, like FBN Holdings, UBA and Guaranty Trust Bank which recorded struggling growth in profit, while four out of the fifteen banks recorded decline in profit.
Further analysis of the banking sector performance for third quarter showed that Unity Bank Plc recorded the highest profit after tax of N11.1 billion, representing 859 per cent rise over N1.15 billion recorded in September 30, 2013. It was followed closely by Stanbic IBTC Holdings that recorded a profit after tax of N25.26 billion in the period under review, representing a 57 per cent increase over N16.1 billion profit in the similar period of 2013.
Sterling Bank Plc, with a profit after tax of N7.1billion, came third, showing a 39 per cent increase, while Wema Bank Plc gained 33 per cent over the N1.6 billion in 2013 to N2.13 billion in 2014. Access Bank Plc and Ecobank Transnational Incorporated grew profit after tax for the nine month result by 28 per cent and 31 per cent respectively. First City Monument Bank Group came close at 11 per cent from N12.8 billion to N14 billion.
Other banks with marginal gain in profit after tax include Diamond Bank Plc and Fidelity Bank Plc with a growth of one per cent and two per cent from N20.1 billion and N11.1 billion to N20.18 billion and N11 billion in that order.
Zenith Bank profit grew six per cent to N71 billion as against N67.3 billion recorded in prior nine-month results. UBA was the only tier-1 bank that recorded highest decline in its profit after tax as it fell by 10 per cent to N33.6 billion.
First Bank of Nigeria Holdings Plc also dropped six per cent to N55.6 billion in the third quarter of 2014, while Guaranty Trust Bank profit after tax depreciated by four per cent to N66.7billon in the period under review. Skye bank Plc has the highest profit decline of 15 per cent from N11.7 billion to N7.1 billion.
Analysts have said though the regulatory bodies policy might be stringent, most banks have adopted more prudent management of their core-banking operations.
However, they noted that increased growth in profit and gross earnings have not translated into surge buying of banking shares, as it has been the major driver of activities in the equities market.
The banking index opened the year at 447.84 basis points closedOctober 31, 2014 at 373.92 basis points, translating into nearly 17 per cent or 73.92 decline.
According to the managing director, BGL Securities Limited, Mr. Peter Adebola said the consistent changes in Central Bank of Nigeria (CBN) monetary policies is taking tolls on listed banks profit accrual.
He said, “The CBN had maintained the Cash Reserve Ratio (CRR) at 75 per cent for public sector companies, shrinking the funds banks needed to operator in terms of generating interest income.
“Before the increase in CRR, banks have access to cash to invest in other commercial banking operations. Since the increase, all the income have actually gone down.”
Speaking further on banks performance at the financial market, Adebola said, the 12 per cent monetary policy rate has been stable for some time now and the yield on bond has been going upward, noting that as a result, the prices generated from fixed income are down which is affecting the profit banks can make on fixed income facilities.
Renaissance Capital Limited (RenCap), a Lagos-based financial advisory and Research Company in its report had noted Nigerian banks showed that their activities were mostly weakened by the significant increase in the CRR for public sector funds.
The CBN had further raised the CRR on public sector funds to 75 per cent in the first quarter of this year, from the 50 per cent it was last year. Also, CRR on private sector CRR is currently at 15 per cent.
Source : Leadership