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.
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.
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.
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.
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.
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.
UACN’s major shareholder sells substantial shares
This is coming a few days after UAC Nigeria Plc announced a deal to divest 51% of its shares in UPDC.
One of the 3 major shareholders of UAC Nigeria Plc (UACN), Blakeney LLP, has substantially reduced its stakes in the conglomerate with the sale of 80 million additional shares.
This was disclosed in a notification that was sent to the Nigerian Stock Exchange (NSE) by UAC Nigeria Plc. The notification was signed by the Company Secretary/Legal Adviser, Godwin Samuel.
Note that this is coming a few days after UAC Nigeria Plc announced a deal to divest 51% of its shares in UACN Petroleum Development Company (UPDC) to Custodian Investment Plc.
An analysis of this current sales and reduction of its stake shows that Blakeney LLP reduced its shareholding in the conglomerate through a deal on August 5, at a price of N5.75 per share. A further breakdown of the transactions shows that the 80,000,000 units were sold at N5.75 amounting to N460 million in purchase consideration.
Back Story: It can be recalled that UACN had earlier sent notifications to the NSE announcing sales of 75 million shares by Blakeney between the months of April and June
- In an earlier notification sent to the Nigerian Stock Exchange and other stakeholders in February 2019, UAC of Nigeria Plc announced the emergence of three major shareholders with more than 5% stake in the company. The three major shareholders include Themis Capital Management (8.08%), Stanbic IBTC Nominees Limited (7.27%), Blakeney GP 111 Ltd (7.55%).
- Nigeria’s oldest conglomerate has gone through some major restructuring in recent times following investments by these core investors and other major shareholders. In September 2019, UACN announced the outright dissolution of its interest and restructuring of UAC Property Development Company (UPDC) with the transfer of its interest directly to the shareholders.
- Over the years, UACN has transformed from a very large conglomerate with footprints in different sectors of the economy to a leaner organization with interest in Manufacturing, Food & Beverage, Logistics, Agro-allied Industry, Paints and Chemicals.
- Blakeney Management is one of the oldest and largest institutional investors in Africa and the Middle East. They are based in London and have been managing funds since 1995 for some of the largest institutions in the world.
AXA Mansard insurance divests from AXA Mansard pension as new owner emerges
This disclosure was made in a notification that was sent to the Nigerian Stock Exchange.
AXA Mansard Insurance Plc has announced its divestment from its subsidiary, AXA Mansard Pension Limited, after agreeing to sell its stake to Eustacia Limited, a member of the Verod Group.
This is part of the insurance firm’s plan to focus on and grow its insurance businesses across all parts of the country.
This disclosure was made in a notification that was sent to the Nigerian Stock Exchange (NSE) on August 8, 2020, by AXA Mansard Insurance Plc and signed by its Company Secretary, Mrs Omowunmi Mabel Adewusi.
AXA Mansard Insurance disclosed that Eustacia Limited was selected as the preferred bidder, after the completion of a bid process. AXA Mansard along with the minority shareholder agreed to sell the entire issued ordinary share capital of AXA Mansard Pensions comprising of 60% shareholding (2,067,672,000 shares) held by AXA Mansard Insurance Plc and 40% shareholding (1,378,448,000 shares) held by the minority shareholder.
The statement from AXA Mansard Insurance reads, ‘’AXA Mansard Insurance Plc announces the divestment from its subsidiary, AXA Mansard Pensions Limited. After obtaining the Shareholder’s approval at the Company’s Extra-Ordinary General Meeting held on the 13th of February 2020, the Company commenced the process of divestment by appointing Messer Rand Merchant Bank as the Financial Advisers while Aluko & Oyebode acted as the Legal Advisers on the transaction.’’
‘’Upon completion of a bid process, Eustacia Limited (a member of the Verod Group) was selected as the preferred bidder. The Company along with the minority Shareholder entered into a sale and purchase agreement with Eustacia Limited to divest the entire issued ordinary share capital of AXA Mansard Pensions comprising of 60% shareholding (2,067,672,000 shares) held by AXA Mansard Insurance Plc and 40% shareholding (1,378,448,000 shares) held by the minority shareholder.’’
The insurance firm, also in its statement said that the divestment has received letters of no objection from the National Insurance Commission (NAICOM), National Pension Commission (PENCOM) and the Federal Competition & Consumer Protection Commission (FCCPC).
It should be noted that the completion of the divestment is, however, subject to the receipt of the final approval of the National Pension Commission.
In his reaction, the CEO of AXA Mansard Insurance Plc, Kunle Ahmed, said that this transaction marks a new step in the insurance firm’s broader strategy to focus on and grow their life, property & casualty and health businesses across all its geographies. He said that the AXA Group sees great potential in the Nigerian insurance market and believes they are ideally placed to capture these opportunities due to its market leadership position.
On his part, the CEO of AXA Mansard Pension Limited said that they are confident about Verod’s strong commitment to providing the company with the requisite support to actualize their promise to its clients and stakeholders.
A partner at Verod Group, the new owners, Eric Idiahi, said, ‘’We strongly believe that this is the ideal time to enter the market and that AXA Mansard Pensions provides an excellent beachhead from which to establish a consolidated position and gain market share.’’
Nairametrics reported early this year that AXA Mansard Insurance Plc announced that its shareholders have approved the company’s plan to sell its pension management subsidiary, AXA Mansard Pensions Ltd and some undisclosed real estate investments.
Africa’s largest telecoms firm, MTN, to divest from its Middle East operations
The MTN Group is in advanced talks to sell its stake in MTN Syria to the minority shareholder.
Africa’s largest telecoms firm, the MTN Group, has announced its plans to exit the Middle East. This is part of the wireless carrier’s strategic plan to shift focus entirely to its home continent, Africa.
The mobile operator said that as part of its medium-term strategy, it will be leaving the Middle East, starting with the sales of its 75% stake in MTN Syria. Overly reduced revenue from war-torn Syria and the complex nature of the operating environment in the country are part of the reasons MTN is divesting.
MTN’s Chief Executive Officer, Rob Shuter, noted during a conference call with reporters, that “the Middle East environment is becoming increasingly complex and it contributes less to the group’s earnings.’’
Shuter disclosed that the disposals in the Middle East region will be done in a phased manner, with its 3 consolidated subsidiaries in Yemen, Afghanistan, and Syria earmarked to be sold first. These markets only contribute about 4% to the group’s earnings before interest, depreciation, taxation, and amortization.
The MTN Group is in advanced talks to sell its stake in MTN Syria to the minority shareholder, TeleInvest, who has 25% stake in the firm, according to the CEO. He believes that the telecoms firm is better served to focus on its Pan-African strategy and simplify its portfolio by leaving the Middle East region in an orderly manner.
In the medium term, the group will also dispose of its 49% stake in MTN Irancell, one of its largest markets.
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The South African firm plans to exit the entire portfolio in time, which will then leave it with 17 subsidiaries in Africa.
Just yesterday, Nairametrics reported about MTN’s plan to sell its stake in Jumia Technologies. MTN will also be divesting from telecommunications infrastructure firm, IHS Towers. The divestments from Jumia and IHS Towers were informed by the decision to raise funds in order to reduce MTN’s debts. It will also help the company to refocus its operations.