Tuesday, 12 August 2014

7 BANKS LOSE N149.03BN TO REGULATORY COST

Regulatory headwinds and bloated operating expenses have continued to squeeze banks’ profit as seven Nigerian banks recorded N149.03 billion loss in their 2014 half year results.
The negative impact on banks’ bottom line was attributed to the Central Bank of Nigeria (CBN) increase in Cash Reserve Ratio (CRR) on public sector deposits to 75 per cent from 50 per cent last year and also told lenders to lower fees and commissions to reduce costs to customers, with the increase in AMCON levy from 0.3 per cent to 0.5 per cent.
The CBN also raised requirements on private deposits to 15 per cent from 12 per cent to reduce liquidity and support the naira and as well the sporadic increase in tax rate.

In their separate filings with the Nigerian Stock Exchange (NSE), most banks reported a drop in profit. Even of more concern is the fact that some of these banks have recorded a drop in profit for two consecutive quarters – Q1 and Q2. Analysts believe this may hamper their full year profit and jeopardise dividend payment.
In its filing, Union Bank’s half-year pretax profit fell to N6.46 billion, down 34 per cent from N9.8 billion a year ago. Also, gross earnings fell by 11.69 per cent to N49.59 billion during the six months to June 30.
First Bank Holding Company equally reported a drop in half-year pretax profit. Its Profit Before Tax (PBT) fell 12 per cent to N48.25 billion, compared with N54.81 billion recorded in the same period last year. Its gross earnings, however, climbed to N164.85 billion from N150.73 billion recorded last year.
The same headwind ripped through Skye Bank as its half-year pretax profit dropped by 31 per cent to N7.26 billion against N10.54 billion in the same period of last year. Similarly, gross earnings at the mid-tier lender were also adversely impacted as it fell to N63.88 billion from N71.16 billion in the same period of last year.
Diamond Bank said its half-year to June pretax profit dropped to N16.07 billion, 8.4 per cent lower than the N17.56 billion recorded in the same period last year. Gross earnings, however, rose to N78.72 billion from N70.05 billion last year.
Fidelity Bank’s half-year to June pretax profit dropped by 15.7 per cent to N9.43 billion compared with N11.19 billion in the same period last year. Unlike Skye Bank, Fidelity Bank’s gross earnings, however, rose to N63.25 billion from N62.90 billion a year earlier.
Similarly, United Bank for Africa (UBA), Nigeria’s pan-African bank, reported a drop in its half-year pretax to N28.89 billion. This figure represents a 13 per cent drop from N33.25 billion it recorded a year ago.
When compared to its December 2013 results, Ecobank’s half-year to June pre-tax profit fell by 7.63 per cent to N32.67 billion ($201.83 million), from N35.37 billion recorded in December last year.
Ecobank’s gross earnings also dropped to N199.17 billion compared with N411.18 billion in the same period of last year.
However, a handful others recorded marginal rises in profit. First City Monument Bank (FCMB) said its half-year pretax profit rose to N11.14 billion, up by five per cent from N10.64 billion a year ago.
The mid-tier lender also recorded a rise in its gross earning to N69.62 billion during the six months period to June 30 as against N63.29 billion in the same period of last year.
Zenith Bank, Nigeria’s top-tier lender recorded an 11 per cent rise in PBT from N52.09 billion during the six months to June 30, 2013 to N57.85 billion as at June 30, 2014. Details of the half-year result showed all round improvements, with gross earnings also up by 7.8 per cent from N171.02 billion in 2013 to N184.43 billion.
Sterling Bank recorded a marginal rise in its first-half pretax profit from N6.27 billion a year earlier to N6.33 billion currently. Gross earnings rose by 16.4 per cent to N48.69 billion during the six months period to June 30.
Unity Bank, which has had a new management in place since the beginning of the year increased its half-year pretax profit 81 per cent to N7.89 billion from N4.35 billion in the same period of last year. Gross earnings equally rose to N30.85 billion during the six-month period, against N30.17 billion a year ago.

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