Someone once told me only Nigerian banks reverse their fortunes in such a short time and by such gigantic margins that you beg to wonder. An Ugometrics survey of 17 of the biggest Banks in Nigeria reveals Nigerian Banks made a total of N544,865,446,000 for the period ending December 2012. This reveals a remarkable recovery from 2011 which was characterized by write offs. In 2011 bank profit after tax was N87,931,131,000 only, representing a whopping 519.7% increase. This is almost unheard of considering that most sectors in the economy, which banks incidentally depend on for their income saw very modest profitability growth.
The contributory factor to this earnings growth appears to have been the rise in operating profit as a percentage of operating income showing an improvement in efficiency of about 215%. In 2012, operating expenses sliced off 77% of operating income for the banks compared to 90% in 2011. That helped increase operating profit by 405% to N612.3billion when compared t0 N121.4billion posted in 2011. So whilst the banks have mostly reduced their loan losses (by an estimated 65%) their ability to contain cost relative to the income generated was immense.
Another interesting stat was tax which despite rising 193% to N71billion in 2012 was actually just 11.5% of PBT compared to 21.6% in 2011. It is important to note though that Nigerian banks have a knack for reversing fortunes made over years by just making a bad bet in one year. As the indices below reveals about 6 of the banks listed here make up over 70% of the PAT anyway. Therefore to me, the significance of this information only ends at the mention of it. It certainly doesn’t mean banks are currently a viable investment.
Other Notable Indices
- The Big six, GTB, Zenith, ETI, FBNH, UBA, Access made up 74% (N402.8billion) of the combined profits
- Collective Return on Average Asset was 2.5%
- Collective Return on Average Equity was 19.8%
- Nigerian Banks managed a collective assets of about N23trillion, a 15.4% rise from 19.8trillion posted in 2011
- Nigerian Banks have a combined equity as at December 2012 of N3trillion, compared to N2.5trillion in 2011
- Total Deposits as at December 2012 was N16.5trillion 16% higher than N14.2trillion posted in 2011
- The Big five GTB, Zenith, ETI, FBNH, UBA made up 52% (N8.56trillion) of the total deposits. Including ETI takes it up to N10.9trillion or 67%
- Loans advanced was a combined N10trillion compared to N9trillion posted in 2011.
- UBA, FCMB, Diamond, Union Bank, Enterprise all came back from losses totalling N118.5billion declared in the prior year. Union Bank was the highest declaring N82.5billion loss (2011) which it improved to N7.3billion profits in 2012
- The Survey reviewed the following Banks/Holdco’s, Zenith Bank, GT Bank, FBN Holdings, UBA Group, Fidelity Bank, Access Bank, Diamond Bank, Skye Bank, Eco Transatlantic, Citi Bank, Standard Chattered, Stabic IBTC, Enterprise Bank, FCMB, Sterling Bank, Unity Bank, Union Bank
- All are listed on the NSE except Citi Bank, Standard Chartered and Enterprise bank
Follow the link below for full data listing the banks side by side