A total of twelve banks that are listed on the Nigerian Stock Exchange (NSE) collectively reported a profit after tax of N260.983 billion in Q1 2020. While this is impressive, there are strong indications that banks’ Q2 2020 profits will be significantly lower.
See the top performers
According to checks by Nairametrics Research, Nigeria’s tier-1 banks (or FUGAZ as they are often called), dominated the list of top performers. As always, Zenith Bank Plc recorded the most profit during the period with N50.5 billion. This is followed closely by Guaranty Trust Bank Plc, which reported a profit after tax of N50.1 billion. Access Bank Plc recorded N40.9 billion, while United Bank for Africa reported N30.1 billion. FBN Holdings Plc also reported a profit after tax of N25.7 billion.
The Q1 2020 profit after tax for the rest of the banks is detailed below:
- Stanbic IBTC Holdings: N20.6 billion
- Ecobank Transnational Incorporated: N24.3 billion
- Fidelity Bank Plc: N5.8 billion
- Sterling Bank Plc: N2 billion
- Union Bank of Nigeria Plc: N6 billion
- FCMB Group Plc: N4.7 billion
- Wema Bank Plc: N977.3 million
Some banks under-performed
Further analysis of banks’ Q1 2020 financial statements revealed that the likes of Ecobank, Fidelity, Sterling, and Wema Bank witnessed slight declines in their profit after tax year on year. For instance, Ecobank’s profit declined by as much as 10% when compared to some N30.5 billion that was recorded in Q1 2019. Fidelity Bank’s profit of N5.8 billion is less than N5.9 billion that was reported in Q1 2019. Similarly, Sterling Bank reported N3.2 billion worth of profit in Q1 2019, whereas its profit declined to N2 billion in Q1 2020. Also, Wema Bank’s profit in Q1 2019 was N1.1 billion. This is more than N977.3 million that the bank reported in Q1 2020.
In the meantime, the likes of Jaiz Bank Plc, Aso Savings, Unity Bank Plc, and Aso Savings and Loans Plc are yet to release their Q1 2020 financials. Aso Savings has not released any financial statement since 2013. Unity Bank’s last-released financial statement was for Q3 2019. Jaiz Bank, on the other hand, recently released its audited full-year 2019 financial statement.
Lesser performance in Q2?
Recall that the Coronavirus pandemic officially hit Nigeria in March 2020. What this means is that many businesses (including banks) began feeling the negative impacts as far back as then. Yet, some of them managed to record relatively positive performances. However, there have been forecasts suggesting that banks’ performance in Q2 (and the rest of the year) not be so positive after all.
READ MORE: Analysis: Nestlé strong but exposed.
As Nairametrics reported, a recent report by Augusto & Co noted that Nigerian banks’ earnings and profitability are expected to decline drastically in 2020. In specific terms, banks’ earnings from their core business are projected to decline in the short term due to an expected rise in impairment charges and lower yields on their loan books. More so, the contractionary monetary policy stance, exacerbated by discretionary Cash Reserve Requirement (CRR) debits by the CBN, is expected to affect banks’ overall performance this year.
Just last week, the CBN debited some banks a total of N459.7 billion for failure to meet CRR requirement. A report on this development by Nairametrics explained how this would affect banks’ ability to generate profits for their shareholders.
COVID-19, VAT, FX scarcity adversely impacted our operations in 2020 – Nigerian Breweries boss says
NB Plc’s operations in 2020 were adversely impacted by the COVID-19 pandemic, VAT increase and FX devaluation.
The management of Nigeria’s leading brewer, Nigerian Breweries Plc has revealed that its operations in 2020 were adversely impacted by the COVID-19 pandemic, VAT increase, FX devaluation and scarcity of foreign exchange.
This statement was made by the Managing Director of Nigerian Breweries, Mr Jordi Borrut Bel, at the company’s pre-AGM media briefing for the financial year-end 2020, which held in Lagos this week.
He noted that the increase in the brewer’s cost in 2020 was due to the COVID-19 pandemic which disrupted the company’s operations, as well as the increase in VAT, devaluation and FX scarcity which has put pressure on input cost.
The Nigerian Breweries boss explained further that the increase in cost could not be fully attributed to currency devaluation and foreign exchange scarcity.
He explained that the increase in costs of goods sold, as reported in its audited financial results, could also be linked to the increase in the volume of goods sold, as the company’s sales volume in 2020 increased by almost the same percentage as the cost of goods sold.
To deal with this challenge going forward, he revealed that the company is focused on the supply chain, and will continue to seek out ways to mitigate any of the price increases coming from FX scarcity.
The company’s profitability in question?
An analysis of the company’s result revealed that despite the 4.3% increase in net revenue from N323.00 billion recorded in 2019, to a total of N337.01 billion in 2020, the company’s profit declined significantly by 53.3% to N7.53 billion.
Speaking on this, Jordi Borrut in his statement at the press briefing noted that the brewer’s business performance in 2020 was quite impressive especially in the face of the COVID-19 pandemic and economic recession. Despite these challenges, the company maintained a strong and healthy balance sheet.
“There was a slight reduction in profitability but compared to the previous year, the business witnessed an improved growth in revenue. The significance of this is that the business became more stable and healthier,” he said.
What you should know
- Nigerian breweries, being the largest brewer in the country, maintained its stance in terms of generating profits year-on-year. The company emerged as the only brewer to record a profit of N7.37 billion from its operations in 2020, 54.3% lower than 2019 figures (N16.1 billion).
- From this, the leading brewer was able to pay shareholders a total dividend of N7.5 billion, translating to a dividend of 94 kobos per share – a dividend payout in which exceeds 100%.
- While Guinness and International Breweries made a loss of N12.6 billion and N24.9 billion respectively, this reality impacted their ability to pay their shareholders dividends in 2020.
Highest paid Nigerian bank MD/CEOs of 2020
Bank MD/CEOs in Nigeria earned a combined N1.5 billion in salaries in 2020.
The banking sector, especially commercial banks, is one of the most profitable sectors of the Nigerian Economy churning out profits of close to a trillion in 2020 alone. They are also one of the highest employers of labours in the country employing over 93,000 Nigerians.
Sitting at the helm of affairs is the Chief Executive/Managing Director, the highest-ranking executive in the organization saddled with the responsibility of making the best corporate decisions, oversight of the execution of the organisation’s corporate strategies and most importantly increasing the shareholders’ return. The buck basically stops on their table.
Thus, these enormous responsibilities also come with a considerable executive compensation for their service making them ostensibly the highest-ranking staff of the bank.
In typical Nairametrics fashion, we bring to you a list of the highest-ranking bank CEOs for 2020 based on their executive compensation (exec comps). The bank MD/CEOs under our review earned over N1.5 billion in salaries in 2020.
The data was sourced from the published audited accounts of the bank and verified by Nairametrics Research.
Nairametrics | Company Earnings
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- Tantalizers Plc reports a loss after tax of N422.05 million in FY 2020.
- NASD Plc announces admission of newly demutualized NGX shares.
- Lotus Halal Fixed Income announces dividend of N20 per unit for Q1 2021.
- Friesland Campina Wamco Nigeria Plc announces AGM, proposes dividend of N6.74 per share.
- ETI appoints Akin Dada as Group Executive, Corporate & Investment banking.