Banks’ profit spikes on new CBN rules
The foreign exchange policies introduced by the Central Bank of Nigeria (CBN) have spurred banks to growth as second quarter profit spiked.
The cumulative net income of the 13 lenders that have released Half Year 2017 results spiked by 26 percent to N332.08 billion in June 2017, according to data compiled by BusinessDay.
The growth at the bottom line (profit) was supported by a 34 percent surged in combined interest income to N1.41 trillion in June 2017, which resulted in a 21 percent surge in cumulative gross earning to N1.92 trillion.
Drilling down the figures shows Guaranty Trust Bank (GTBank) recorded a 17 percent jump in net income, largely driven by optimisation of the balance sheet asset yield, efficient deposit mix with resultant low cost of funds coupled with effective Cost to Income Ratio.
Zenith Bank’s net income surged by 1.12 percent to N75.31 billion in June 2017 while Access Bank’s net income was up 17 percent to N39.45 billion.
Stanbic IBTC’s net income surged by 1.13 percent to N24.11 billion in the period under review while Fidelity Bank’s net income was up 66 percent to N9.03 billion.
Analysts are of the view that CBN’s establishment of a forex window for investors and exporters on April 21, coupled with the apex bank’s sustained interventions, has helped to foster the timely execution of all eligible transactions.
The new policy has also resulted in increased supply in the foreign exchange market while the gap between the official and parallel market rates has waned.
Banks shares have been rising since start of the year as investors continue buy into their stocks.
The Nigerian Stock Exchange (NSE) Banking Sector Index has increased by 54 percent, since the start of the year.
Investor appetite for equities has increased with the Nigerian Stock Exchange All Share Index (NSEASI) 24.4 percent higher between January and June 2017, recovering from a 6.2 percent contraction between January and December 2016.
Zenith Bank’s shares has returned 58.64 percent year to date (YTD), Access, 64.05 percent YTD; GTBank, 61.94 percent; YTD, United Bank for Africa (UBA), 92 percent; Fidelity, 59.52 percent; and Stanbic IBTC Holdings, 163.33 percent, outperforming the NSE ASI.
The central bank, on September 9, injected $250 million into the various segment of the interbank foreign exchange market.
Activities at the corporate bond market has resumed as Fidelity Bank plans to raise Eurobond.
In a press release posted on the website of Nigerian Stock Exchange (NSE), Fidelity Bank plans to launch up to $500m senior unsecured medium-term debt notes (Eurobond) and a tender offer for the bank’s outstanding $300m 6.875% notes due May 9, 2018.
Some Nigerian issuers like Zenith Bank and UBA have successfully issued Eurobond that was oversubscribed by 7.375 percent and 7.875 percent respectively, signalling continued global investor appetite for Nigerian assets.
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