Banking sector index up 73.3% on interest income

by | January 31, 2018 12:51 am

Deposit money banks showed strength, beating other sectors in the equities market in 2017,  according to a report by Afrinvest Securities Limited.

Given the resilience demonstrated by the banks amidtougher operating conditions, the banking index was unsurprisingly the best performing sector in 2017, up 73.3 percent. Performance of the banks remained driven by resilient earnings, supported by interest income due to higher interest rate environment.

According to the report, Fidelity Bank plc (+196.4%) received the most buying interest. In addition, significant interest in Tier-1 banks-Guaranty Trust Bank (+64.9%), Zenith Bank (+73.8%), Access Bank plc (+78.0%) and UBA (+128.9%) was recorded.

Fidelity bank is a leading tier-2 bank with total assets size of N1.31 trillion as at June 2017. The bank’s focus spans Small and Medium Enterprises (SME), corporate and retail banking, which defines its core strategy.

Recently, Fidelity’s retail strategy has been driven by its electronic channels, which currently account for 72.0 percent of customers’ transactions with ATMs and mobile banking accounting for up to 70.0 percent.

The bank services its 3.8 million accounts through 240 business offices, 3,267 professional staff, 783 ATMs, 3,091 POS terminals and 2.0 million debit cards. The bank’s Capital Adequacy Ratio (CAR) of 17.2 percent remains above the 15.0 percent threshold for international banks given by the Central Bank of Nigeria (CBN). 

GTBank has established itself as one of the leading Nigerian banks with business operations across West and East African countries as well as the United Kingdom. The bank has successfully navigated the tough operating environment over the years to maintain its impressive performance and current ranks as tier-1 bank by analysts classification, with total assets of N3.2 trillion as at first half of 2017 and CAR of 23.1 percent (above the minimum requirement for international banks).

The bank has over 400 branches as well as e-channels to serve its growing customer base, put at 10.7 million in the first half of 2017.

Zenith bank is the largest in the country with total assets of N4.9 trillion as at first half of 2017 and falls within tier-1 categorisation of banks.

The bank has subsidiaries in Ghana, Sierra Leone, The Gambia, and the United Kingdom. In June 2017, the bank raised US$500.0 million via Eurobond, which was the second tranche of its US$1.0 billion medium term note launched in 2014. The bond was issued at 7.375 percent, 50bps below sovereign issuance yield that took place four months earlier.

Access bank, in 28 years of its operations has survived the thick and thin of the Nigerian banking industry. The bank’s strategic focus on corporate, business and personal banking segments, with recent expansion into retail segment, has supported the growth trajectory of the group.

The bank ranked as the fifth largest bank in Nigeria with total assets size of N3.5 trillion as at 2016 full year. Access bank is adapting well to a dynamic world of growing Financial Technology (Fintechs) disrupting ‘brick and mortar’ banking through its “PayWithCapture” payment app, which allows individuals to make payments for goods and services by scanning a pre-generated QR-Code.

Access bank’s presence in Africa cut across Ghana, Rwanda, Zambia, The Gambia, Sierra Leone, and D.R. Congo with 33, 7, 6, 6, 4, and 2 branches respectively. The bank services its 8.0 million customers through 3,854 professional staff, 4.6 million cards 385 branches, 1,734 ATMs and 9,628 POS terminals.

United Bank for Africa (UBA) ranks as the fourth largest bank by total assets of N3.7 trillion and fifth largest by loan book of N1.6 trillion as of first half of 2017. The bank is one of the few success stories of regional expansion strategy several Nigerian banks have embraced in the last two decades.

The pan-African growth driver has seen UBA widen its footprint on the continent from 10 countries in 2008 to 19 in 2011 in addition to presence in global banking headquarters – New York, London and Paris.

The strategy has however yielded fruit, with the contribution of pan African operation (ex-Nigeria) to gross earnings rising from 22.0 percent in 2013 to a record 31.0 percent in full year 2016, making the bank the most diversified in terms earnings sources among Nigerian banks.

UBA currently has over 14 million customers, which it services via 1000 branches and customer touch points as well as alternative banking channels such as ATMs (1,750), POS (13,500) and mobile and online banking platforms.