•FirstBank, UBA, Zenith lead
Nigeria’s top 10 banks which include three of the rescued banks, control 77 percent of the total deposits of the banking industry (as at the close of 2010) data obtained by BusinessDay has shown.
First Bank with a deposit base of N1.33 trillion had the highest deposits in the Nigerian banking industry as at the close of 2010. It was followed by Zenith Bank with a deposit base of N1.29 trillion while UBA ranked third with a deposit base of N1.27 trillion. GTBank ranked fourth with a deposit base of N713 billion as at the close of 2010.
Union Bank had the fifth highest deposits of N648 billion as at the end of 2010 followed by Oceanic Bank with a deposit base of N637 billion for the same period.
It was followed by Intercontinental Bank Plc which had the seventh highest deposit among Nigerian banks of N626 billion.
The first three banks First Bank, Zenith and UBA, together had total deposits of N1.91 trillion, which is about 25 percent of the banking deposits of the top ten banks which stands at N 7.52 trillion.
The other banks among the top ten in deposits are Skye Bank with a deposit base of N471 billion, Access Bank with a deposit base of N441 billion and Diamond Bank with a deposit base of N379 billion at the close of 2010.
Interestingly, BusinessDay analysis also shows that the rescued banks, except Union Bank and Bank PHB Plc, saw significant growth in deposits within the period. Oceanic Bank grew its deposits by 16.72 percent from N546 billion to N637 billion. Intercontinental Bank grew deposits by 25% to N626 billion in 2010 from N504 billion in 2009. Finbank grew deposits by 6.63 percent to N209 billion in 2010 from N196 billion. Spring Bank recorded a 39 percent deposit growth, the highest among all banks, to N198 billion from N143 billion in 2009.
The seven rescued banks namely, Union Bank, Oceanic Bank, Intercontinental Bank, Bank PHB, Afribank, Finbank and Spring Bank together, have combined deposits of N2.96 trillion, about 28 percent of the deposits of the banking system.
Also when Nigerian banks are ranked on the basis of revenues, three of the rescued banks ranked among the top ten, with Union Bank ranking number five in revenues with total revenues of N130 billion while Oceanic Bank ranked sixth with total revenue of N106 billion in 2010. Intercontinental Bank ranked number ten among the top ten banks in revenues with total revenues in 2010 of N75 billion. Bank PHB ranks number 11 with total revenue of N67 billion in 2010. The seven rescued banks account for 28 percent of banking sector revenues in 2010.
When the banks are ranked on the basis of profit before tax, the rescued banks also came tops, with Intercontinental Bank profit before tax of N63 billion being the highest profit before tax by any bank in Nigeria in 2010. Bank PHB ranked fourth among the top ten banks with profit before tax of N36 billion, while Oceanic Bank ranked sixth with profit before tax of N29 billion. Fin Bank ranked eighth among the top ten banks with profit before tax of N16 billion while Wema Bank ranked 10 among the top 10 with profit before tax of N13 billion.
The rescued banks also ranked highest in return on sales, which defines how much profit banks make per Naira of earnings. Six of the rescued banks dominated the top ten on this index with Intercontinental Bank ranking highest with a return on sale of 84 kobo per Naira of earning.
Seven of the rescued banks also ranked among the top ten in terms of return on assets, a measure of efficiency among banks with Intercontinental Bank topping this index again with a return on assets of 9.75 percent in 2010.
Analysts however note that the return on sales, assets and return on equity figures should not be taken at face value, since the rescued banks profit within the period were boosted by write- backs of the previous year’s provisions.
Opeyemi Agbaje, Senior Consultant, Resource and Trust Company Limited, speaking on the significance of the figures, noted that the fact that the rescued banks are still very significant in the Nigerian financial system is the reason why the CBN should be more circumspect with the threat to liquidate the banks.
Why would you want to liquidate some of your most viable banks? he asked.
It explains why the owners those banks feel some justification in fighting to retain their banks. Fundamentally, it also shows that the banks still had strong franchise despite their shortcomings.
Yvonne Mhango, Renaissance Capital’s analyst for Sub Saharan Africa, also says the significance of the banking sector to the capital market and the non resolution of the crisis recapitalisation process of the rescued banks is a contributing factor to the slowdown of the Nigerian capital market.
Eric Eboh, a policy economist and executive director at the African Institute for Applied Economics (AIAE) however believes the CBN must have done a scenario analysis to ensure that the economy does not suffer any major shock if it has to liquidate or nationalise the rescued banks.
I believe the CBN will do all it can to ensure that the confidence of the financial system is preserved.