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This is how much these Tier 1 banks spent on adverts in 2017

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Jim Ovia

Nigerian banks, on the average, spend more on advertising compared to companies in other sectors of the economy. Little wonder Nigeria’s Tier 1 banks or FUGAZ, spent a combined sum of ₦35.7 billion on advertising in the full financial year ended December 31st, 2017.

This amount is slightly above ₦31.1 billion, the combined sum the banks spent for the same purpose in 2016.

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It should be noted that some companies outside the banking sector such as Unilever, Okomu Oil, and WAPCO spent ₦3.7 billion, ₦540 million, and ₦477 million respectively.

Break down of the advertising costs

Zenith Bank Plc is the highest spender, having recorded ₦8.8 billion as its total costs on adverts for the financial year ended 2017. This is a little less than ₦9.5 billion which the company spent on adverts in 2016. Meanwhile, the company recorded gross earnings of ₦740 billion in 2017 with an annual profit of ₦177 billion.

United Bank for Africa spent ₦7.4 billion against ₦3.6 billion which it spent in 2016. The company earned a total revenue of ₦461 billion, with a profit after tax of ₦78 billion.

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Guaranty Trust Bank (GTB) spent a total of ₦7 billion on adverts against ₦7.4 billion which it spent in 2016. In total, GT Bank recorded an annual revenue of ₦419.2 billion, with a profit after tax of ₦170 billion.

First Bank of Nigeria Plc spent ₦6.4 billion on advertising against the ₦6.2 billion it spent for the same purpose in 2016.

In return, it realised ₦595 billion in revenues, and a profit after tax of ₦47.7 billion.

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Access Bank Plc spent ₦6 billion in 2017 for adverts. This represents about ₦1.8 billion more than the ₦4.2 billion which the bank had spent in the preceding year. The company recorded a total revenue of ₦459 billion and a profit after tax of ₦61 billion.

Did the costs of adverts affect the banks’ performance?

Looking at the companies’ financial year reports, it can be seen that asides First Bank and UBA, the companies that spent more on advertising reaped more profits.

Zenith Bank spent the most out of all the other banks and recorded the highest profit of ₦177 billion. This is followed by GTBank which recorded ₦170 billion.

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It should, therefore, be stated that in as much as other factors are responsible for each of these companies’ profits, their commitment to advertising also played a part.

Advertising and Public Relations are two of the most powerful tools utilised in the business world to communicate brands’ benefits and create awareness about new or existing products.

These, in turn, helps companies to either reach newer markets or consolidate on existing ones. In light of this, the importance of advertising and public relations can never be underestimated, as no company can really survive without them.

About Tier 1 banks

Simply defined, tier 1 banks are banks with the strongest financial capabilities. These banks are said to have enough capital to withstand heavy losses without ceasing operations.

In other words, they are the biggest banks by way of assets. In Nigeria, these banks include First Bank, United Bank for Africa, Guarantee Trust Bank, Access Bank, and Zenith Bank; or FUGAZ as we like to call them here at Nairametrics.

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For the sake of this piece, the advertising costs of all the banks were compiled. All the figures are contained in these companies’ audited financial reports as submitted to the Nigerian Stock Exchange.

In conclusion, Nigeria’s Tier 1 banks should consider spending more than they currently do on advertising. This will enable them to reach more market opportunities and position them for more profits. This is important because, even though these banks are already big [with loyal customers], there are always more opportunities which advertising can help unlock.

 

The previous version of this article erroneously classified the amount spent on advertising in millions instead of in billions of Naira. This has been corrected. 

Thanks to our loyal readers for spotting this. 

Patricia

Emmanuel covers the financial services sector for Nairametrics. Do you have a scoop for him? Well then, contact him via his email- [email protected]

1 Comment

1 Comment

  1. Seun

    May 7, 2018 at 12:11 pm

    I guess those advertising cost figures are in billions of naira, not millions as stated…

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Companies

NSITF board to investigate suspended MD and others over financial misconduct

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NSITF, FG moves to scrap hazard allowances earned by State Governors

The board of directors of the Nigerian Social Insurance Trust Fund (NSITF) has revealed that it will investigate the activities of the suspended Managing Director, 3 Executive Directors, and 8 other senior management staff over financial breaches and gross misconduct.

This was disclosed by the Chairman of the board of NSITF, Mr. Austin Enajemo-Isire, in a statement in Enugu on Sunday July 5, 2020.

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Enajemo-Isire said that the Managing Director and other top management staff of the organization would have the opportunity to clear themselves of any wrongdoing with the probe panel which was being set up.

READ MORE: Ecobank appoints Aissatou Djiba Diallo to oversee its fintech initiatives 

While reacting to claims that the suspension did not follow due process as President Muhammadu Buhari did not approve it, Enajemo-Isire said that the approval for the suspension of the affected staff had been conveyed to the Labour Minister in a correspondence referenced SGF. 47/511/T/99 of June 30, 2020.

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According to the Chairman, “The minister has conveyed this approval and directives to me for necessary action in terms of setting up a board-driven investigative panel.

READ MORE: Nigeria’s debt rises to $79.5 billion, as debt to revenue ratio worsens

“This is to give the affected officers the opportunity to clear themselves of the financial and procurement breaches and acts of gross misconduct and other infractions that gave rise to their prima facie indictment.

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“It is in this light that I have decided to call a virtual meeting of the management board on Tuesday, July 7, 2020, to consider the modalities for our action.”

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He, therefore, appealed to staffers of NSITF and their social partners to keep calm and exercise restraint.

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A few days ago, Nairametrics reported the suspension of the Managing Director and some senior management staff over corruption allegations. However, the management in its reaction debunked that claim and said that the President did not approve their suspension but that rather, it was the sole decision of the Labour Minister, Chris Ngige, who they said was overreaching himself.

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Companies

Nigerian Content Intervention Fund increased to US$350 million

The fund expansion was one of the decisions taken at the board’s recent meeting.

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intervention fund, NCDMB, output cut, Petroleum Industry Bill to be passed by mid-2020, says Sylva, FG discovers crude oil in north, says there’s more , OPEC, non-OPEC countries to meet as Saudi, Russia price war affects Nigeria’s budget, FG considers fuel price reduction, OPEC deal: Nigeria to generate additional $2.8 billion revenue as FG reacts

The governing council of the Nigerian Content Development and Monitoring Board (NCMB) announced on Sunday that it has approved a $150 million expansion of the Nigerian Content Intervention Fund, raising it from $200 million to $350 million.

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The fund expansion was one of the decisions taken at the board’s recent meeting on June 16, 2020, chaired by Minister of State for Petroleum Resources, H.E. Chief Timipre Sylva, who is also the Chairman of the Council.

READ ALSO: Nigeria to attract $48.4 billion out of Africa’s $194 billion oil and gas investments

The board said that $100 million from the additional fund would be used to boost five existing loan products, which include manufacturing in the oil and gas industry, asset acquisition of rigs, marine vessels, contract financing for Nigerian oil service providers, contract financing for oil and gas community contractors, and loan refinancing with Nigerian banks.

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The council also announced that $20 million and $30 million would be used for 2 newly developed loan product types (the Intervention Fund for Women in Oil & Gas and PETAN Products) which include Working Capital loans and Capacity Building loans for PETAN member companies.

Started in 2017, the Nigerian content Intervention fund was developed as a $200 Million fund managed by the Bank of Industry, to facilitate on-lending to qualified stakeholders in the Nigerian oil and gas industry on five loan product types.

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The NCI Fund is a portion of the Nigerian Content Development Fund (NCDF), aggregated from the one percent deduction from the value of contracts executed in the upstream sector of the oil and gas industry.

According to the NCMB, “About 94 percent of the NCI Funds has been disbursed to 27 beneficiaries as at May 2020.”

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Seplat gives notice of board meeting, to consider Q2 financial result

The notification is in conformity with the rules of the Nigerian bourse on the obligations of the issuer.

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Seplat Plc, Seplat gives notice of board meeting, to consider Q2 financial result

The indigenous oil and gas firm, Seplat Petroleum Development Company Plc has given notice of its board of director meeting which has been scheduled for Tuesday, July 28, 2020 through a teleconference in Lagos between 10 am and 3 pm.

This was disclosed in a notification that was sent to the Nigerian Stock Exchange (NSE) on July 3, 2020 and signed by the oil firm’s Company Secretary, Edith Onwuchekwa.

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The notification is in conformity with the rules of the Nigerian bourse on the obligations of the issuer, in this case, Seplat, to notify the Exchange at least 14 days ahead of the due date and time when the board of directors hopes to meet to discuss its financial results.

The notification from Seplat states, ‘’In line with the rules of the NSE on the obligation of the Issuer to notify the Exchange at least 14 days in advance, in respect of the date and time when the board of directors will meet to discuss its Q2 2020 Financial Results, we wish to state the meeting details as follows,’’

‘’Date: Tuesday 28th July 2020, Venue: Via Teleconference, Lagos, Time: 10.00am – 3.00pm’

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(READ MORE: Fidelity Bank announces closed period ahead of H2 financial statements release)

Seplat, in its statement, also said they were going to notify the Exchange of the details of the Board’s decision on the 2020 second-quarter financial results immediately after the meeting as required by the rules.

Nairametrics had earlier reported that following the global oil crisis triggered by the coronavirus pandemic, the oil and gas firm, in its released financial statement, announced that revenue declined from $159.5 million in Q1 2019 to $130.5 million in Q1 2020. That represented an 18.2% drop.

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The gross profit dropped from $81.4 million in Q1 2019 to $33.1 million in Q1 2020. This shows a drop of 59.3%. The profit before deferred tax showed a loss of $105.8 million in Q1 2020 as against the profit before deferred tax of $35.8 million that was achieved in Q1 2019. This represented a huge drop of 395.5%.

The company’s CEO, Austin Avuru, said that as part of its strategy, Seplat was shifting focus to its gas business which is less exposed to the oil price drop which is currently ravaging the upstream sector.

The current share price of Seplat on the Nigerian Stock Exchange is N386 per share as at July 3, 2020.

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