Market Intelligence

Nigerian Banks Q1 Results: The Good, Bad & Ugly!


May 1, 2017 | 1:36 am
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13 Banks have released First Quarter 2017 results. We bring you the highlights

                                                                         Fig 1: Banks Rev, PAT, Tot Assets

                                                                          Source: BMI Research, Company Financials

Investors generally see the banking sector as a gauge for the health of an economy.

While sometimes banks can release strong results that can sometimes decouple from a weak or struggling economy, you rarely find a healthy economy with struggling banks.

Thirteen Nigerian banks have so far released First Quarter (Q1) 2017. These include Access, GTB, Zenith, UBA, ETI, Diamond, FBNH, Stanbic, Fidelity, Union, FCMB, Sterling and Wema Bank.

Revenues for the 13 banks rose by 33 percent to N1.05 trillion in Q1, 2017, from N787.1 billion in Q1, 2016.

Net income also grew by 28.6 percent on a cumulative basis to N196 billion from N152.3 billion in Q1, 2016.

Disaggregating the numbers shows that 8 out of 13 banks grew profits in Q1, 2017 from a year earlier, while profits for 5 banks fell from the Q1, 2016 levels.

ETI earned the most revenues for the period at N178.4 billion, followed by Zenith (N147.7 billion), FBNH (N141 billion), Access (N115.9 billion) and GTB (N104 billion), to round up the top 5.

When it comes to Profits after tax or net income available to shareholders the top 5 firms were GTB (N41.5 billion), Zenith (N37.5 billion), Access Bank (N26 billion), UBA (N22.4 billion) and ETI (N18.7 billion).

Looking at net margins (the percentage of revenue remaining after all operating expenses, interest, taxes and preferred stock dividends (have been deducted from a company’s total revenue), GTB again led with the highest margins of 39.6 percent, followed by Stanbic (34.2%) Zenith (25.3%), Access (22.4%) and UBA (22.1%).

The combined loans and advances to customers of the 13 banks increased by 7.85 percent to N15.74 trillion as dollar denominated assets increased on the back of  the adoption of a flexible exchange rate by the central bank in June last year that culminated in the naira losing 40 percent of its value against the U.S currency.

Further analysis of the first quarter financial statement of the 13 lenders showed cumulative deposits from customers were up 7.81 percent to N22 trillion. Interest income in the period under review moved by 25.84 percent to N713.48 billion while interest expense increased by 51.95 percent to N267.86 billion.

The increase in interest expense is probably a reflection of the higher interest rate environment between both periods (Q1 2016 – Q1 2017) as rates rose in response to higher CBN Monetary Policy Rate (MPR).

The cumulative total assets of the banks under our coverage increased by 4.79 percent to 34.67 trillion ($113 billion/ $1 – N306), which is about 28 percent of the country’s GDP of N120.12 trillion.

Meanwhile only 2 Nigerian lenders were valued at over $1 billion by the market, Guaranty Trust Bank (N783.7 billion/$2.56 bn) and Zenith Bank (N467.8 billion/$1.52 billion).

The banking industry was in a full blown crisis last year as an economic downturn hindered customers from paying back monies borrowed from banks.

The ratio of non-performing loans (NPLs) to total credit rose to 14 percent last year, according a central bank report.

This figure higher than the 5 percent threshold set by the regulator.




May 1, 2017 | 1:36 am
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