NPF Microfinance Bank reports strong earnings growth amid monumental challenges
PF Microfinance Bank (MFB) Plc has reported a strong earnings growth as microfinance finance banks continue operate in a volatile and tough operating environment.
Interest income at NPF MFB, lender to small and medium scale enterprises, increased by 27.77 percent to N1.84 billion from N1.44 billion as at September 2016.
Net operating income was up by 22.27 percent to N2.36 billion in the period under review as against N1.93 billion the previous year.
The Bank’s net income increased by 8.72 percent to N747.01 million in September 2017 from N687.04 million as at September 2016.
While NPF MFB’s performance is stellar as evidenced by growth at the top and bottom lines (Revenue and Profit), weak regulations, poor corporate governance, lack of trust for the system, uncolleterized assets and lack of capacity have continued to stunt the growth of microfinance banks.
These challenges have hindered the subsector from contributing to national development through lending to entrepreneurs and most especially the poor rural women.
Experts say federal government has not been supporting MFBs with the right policies. They say government can direct that local government salary should be paid through the MFBs.
Because many customers do not have the necessary collateral that qualifies them for a loan, MFBs find it practically difficult granting those facilities. Another quagmire identified by experts is the issue of
Despite these challenges, MFBs could be a major driver of financial inclusion as many people, especially, the rural dwellers, do not have a bank account.
“Nigeria’s growing entrepreneurial awareness, large unbanked rural areas and high population of poor people are potential markets for the MFBs,” said Ezeh Wordu a Port Harcourt based economist.
The results of EFiNA access to financial services in Nigeria 2016 survey revealed that 36.90 million (38.30 percent of the adults population) have access to bank account. This represents an increase of 3.0 million adults, from 33.90 million in 2014.
The report added that in 2016, the formally included segment increased from 45.40 million adults in 2014 from 46.90 million adults in 2016.
“This represents an increase of 1.50 million adults who have access to Deposit Money Banks, Microfinance Banks, Mobile Money Insurance and Pensions,” said the report.
Further analysis of NPF MFB’s financial statement shows net income a measure of efficiency fell to 31.65 percent in the period under review from 36.50 percent the previous year.
Cost of sales ratio, dropped increased to 68.22 percent in September 2017 as against 64.22 percent the previous year. A resdution inn CIR shows a lender is efficient.
NPF MFB’s shares have gained 18.18 percent to close at N1.30 as of 2:00 pm in Lagos.
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