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Research Analysis

Here’s how much banks spent on advertising & marketing in Q1 2020

Nigerian banks, tend to spend more on advertising compared to companies in other sectors of the economy. And this usually influences their financial performances. 

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Advertising, Nigerian banks' expenses on advertising

Eleven of the Nigerian banks that are listed on the NSE spent a total of N13.5 billion on marketing and advertising in Q1 2020, according to checks by Nairametrics Research. The figure indicates a 15.7% increase when compared to N11.6 billion which the banks collectively spent for the same purpose in Q1 2019.

As expected, all the tier-1 banks (FUGAZ) spent big on advertising/marketing during the first quarter of the year. However, the biggest spender was Fidelity Bank Plc, a tier-2 bank which incurred as much as N2.6 billion on marketing, communication, and entertainment costs.

This is followed by FBN Holdings Plc (the parent company of First Bank of Nigeria Ltd) which spent about N2 billion. Meanwhile, Sterling Bank Plc spent the least amount of N223 million.

READ ALSO: Ratings firm explains why bank non-performing loans could be worse than expected

See below for a full list of the banks and their expenses on adverts/marketing in Q1 2020.

  • Fidelity Bank Plc: N2.6 billion
  • FBN Holdings Plc: N2 billion
  • Guaranty Trust Bank Plc: N1.8 billion
  • Zenith Bank Plc: N1.8 billion
  • United Bank for Africa (UBA) Plc: N1.7 billion
  • Access Bank Plc: N1.4 billion
  • FCMB Group Plc: N790 million
  • Stanbic IBTC Holdings Plc: N394 million
  • Wema Bank Plc: N329 million
  • Union Bank of Nigeria Plc: N267 million
  • Sterling Bank Plc: N223 million

It should be noted that virtually all the companies spent more on marketing and advertising in Q1 2020 except for the likes of FBN Holdings, Sterling Bank, and Union Bank; all of whom significantly reduced their expenses. You may compare the differences by checking here.

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Meanwhile, the banks collectively generated gross earnings of about N935 billion during the first quarter period. Further analysis also showed that Fidelity Bank, which spent the most on advertising and marketing, did not generate the most revenue during the period. Instead, Access Bank did, having recorded a whopping N181.6 billion.

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

On average, Nigerian banks tend to spend more on advertising compared to companies in other sectors of the economy. And this usually influences their financial performances.

Advertising and Public Relations are two of the most powerful tools that are utilised in the business world to communicate brands’ benefits and create awareness about new or existing products. These, in turn, helps companies to reach newer markets or consolidate 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.

Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs.He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor.Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan.If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

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    Billionaire Watch

    Billionaire investors in Nigeria you may not know

    A compilation of top Investors in companies listed on the Nigerian Stock Exchange, with whom you may be unfamiliar.

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    billionaire

    As a Nigerian interested in investing or making money, names like Aliko Dangote, Femi Otedola, Mike Adenuga, Tony Elumelu, Jim OviaRabiu Abdulsalam, etc.come to mind as aspirational role models when it comes to net-worth. These men have all made billions of naira investing in companies listed on the Nigerian Stock Exchange either as founders or strategic investors.  

    • However, there are many other ‘lesser-known investors in companies listed on the Nigerian Stock Exchange who are worth billions (in naira).
    • These investors are seasoned and while they may not always be the founders of the companies they are invested in; they own a significant chunk of the business through strategic investment stakes that earn them billions annually in capital appreciation and dividends.  

     

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    Exclusives

    EXCLUSIVE: Best performing banks in Nigeria judging by the numbers

    Nairametrics analysed the best banks in Nigeria based on their performance in 2020.

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    Nigerian banks, Banks with the Highest Social Media Followers

    The year 2020 was a remarkable year for the Nigerian banking industry as different policies such as the GSI policy, loan restructuring, etc., were issued in the industry’s favour. The industry became more competitive in the year, with each of the banks striving to increase its market size and revenue.

    Tracking the public information of listed banks on the NSE, we analysed them based on popular metrics to determine the leading players in the industry. For the analysis, the full year 2020 results of the following banks were tracked: Access, FBN, FCMB, Fidelity, GTB, Jaiz, Stanbic IBTC, Sterling, Union, UBA, Wema, and Zenith Bank. Ecobank was not considered in the analysis as the bank operates efficiently in other markets besides Nigeria.

    The key metrics considered in these analyses are Total Assets, Net Assets, Total Deposits, Profit After Tax, Return on Equity, and Return on Total Assets.

    READ: Banks spend N12.2 billion on travel expenses in 2020

    Leading Banks by Total Assets

    An analysis of the combined assets of the 12 listed banks that have released their full-year (2020) results (Ecobank excluded) showed that the total assets increased by 27.9% from N38.7 trillion to N49.4 trillion. The increase indicates the stronger financial position of the banks.

    Among the 12 banks listed in Nairametrics tracker, the following are the leading banks.

    First position – Access Bank: N8.7 trillion
    Second position – Zenith Bank: N8.5 trillion
    Third position – UBA: N7.7 trillion
    Fourth position – FBN Holdings: N7.7 trillion
    Fifth Position – GTB: N4.9 trillion

    Upshots – Access Bank and Zenith Bank maintained their positions as the banks with the highest total asset in 2020. UBA however, overlooked FBN to stand in the third position, while FBN declined to fourth on the list. Among the leading banks (FUGAZ), UBA had the highest year-on-year growth of 36.95% in 2020, while in the industry generally, Jaiz bank had the highest growth in total assets of 39.3%.

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    Net Assets

    The net asset represents the remainder when all liabilities have been subtracted from the bank’s total asset. It indicates the shareholders’ funds in the banks. Due to the depository nature of commercial banks and the ability of banks to greatly increase their liabilities, the metric is adopted by the CBN in assessing the banking sector’s ability to withstand credit losses.

    The combined net asset of our 12 analysed banks increased by 17.9% in 2020 with the largest growth of 25.3% coming from Stanbic IBTC.
    The leading banks based on net assets are:

    First Position – Zenith Bank: N1.1 trillion
    Second Position – Guaranty Trust Bank: N814.4 billion
    Third Position – FBN Holdings: N765.2 billion
    Fourth Position – Access Bank: N751.0 billion
    Fifth Position – UBA: N724.1 billion

    Upshots: It is observed that all the banks had significant increases in their net asset in 2020 while the top ones also maintained their positions. However, Union Bank and Wema Bank recorded the least growth in net assets with a 4.75% and 5.9% increase respectively. Zenith Bank’s net asset grew by 18.6%, Guaranty Trust Bank by 18.5%, FBNH by 15.7%, Access bank by 23.8%, and UBA by 21.1%.


    Customer Deposits

    Customer deposits remain one of the most competitive items in the banking sector since it is from deposits that loans are issued out and other investments are made.

    Stanbic 728 x 90

    The total customer deposits of the tracked banks increased by 32.1% in 2020. The bank with the highest growth in customer deposits during the period was UBA growing by 48.1%, from N3.8 trillion at the end of 2019 to N5.7 trillion as of April 31st, 2021.

    The leading banks based on Customer Deposits are:

    First Position – UBA: N5.7 trillion
    Second Position – Access Bank: N5.6 trillion
    Third Position – Zenith Bank: N5.3 trillion
    Fourth Position – FBN Holdings: N4.9 trillion
    Fifth Position – GTB: N3.5 trillion

    Upshots: UBA grew significantly in 2020, moving from fourth place in 2019 to the bank with the highest customer deposits at the end of 2020. Generally, all the banks recorded customer deposits growth higher than 20% in 2020 with the exemption of Jaiz bank and sterling bank which grew by 7.2% and 6.5% respectively.


    Profits After Tax

    Due to the increased capacity seen in the growth of total assets of the banks, the banks under our radar delivered improved PAT except for Fidelity, and Wema Bank.

    Banks that declared the most profits are;

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    First Position – Zenith Bank: N230.6 billion
    Second Position – Guaranty Trust Bank: N201.4 billion
    Third Position – UBA: N113.7 billion
    Fourth Position – Access bank: N106 billion
    Fifth Position – Stanbic IBTC: N83.2 billion

    Upshots: Zenith Bank and GTB outperformed their peers as done in previous years. Also, UBA again outgrew its 4th position in 2019 moving up the ladder to the third position at the end of 2020. However, in terms of growth in PAT, UBA also grew highest by 27.7% in the period under review.


    Return on Equity

    The return on equity is an important metric that shows the percentage of profit made on every N1 of the shareholders’ fund. It is used to measure the performance and efficiency of the banks.

    This metric will show how well banks have maximised the increase in shareholders’ wealth they enjoyed in 2020.

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    The leading banks based on ROE are

    First Position – Guaranty Trust Bank: 26.8%
    Second Position – Stanbic IBTC Holdings: 24.4%
    Third Position – Zenith Bank: N22.4%
    Fourth Position – Jaiz Bank: N17.4%
    Fifth Position – UBA: 17.21%

    Upshots- Sequel to the increase in total assets and PAT of GTB, the bank was able to achieve the greatest efficiency in the industry delivering a return rate of 26.8% to its shareholders.


    Return on Assets

    This metric measures the ability of a bank to sweat its assets and deliver the highest possible profits. In the earlier section of the report, we stated that banks recorded significant increase in their assets, however, the ROA was lower. The ROA is a better measure of efficiency since it takes into cognition the bank’s usage of customer’s deposits.

    Best banks based on ROA are:

    First Position – Guaranty Trust Bank: 4.6%
    Second Position – Stanbic IBTC Holdings: 3.8%
    Third Position – Zenith Bank: 3.1%
    Fourth Position – UBA: 1.7%
    Fifth Position – Jaiz Bank: 1.5%

    Upshots: A similar result is seen in ROA just as seen in ROE. The average industry ROA was 2.05% and Access (1.3%), FBN (1.1%), FCMB (1.1%), Fidelity Bank (1.2%), Sterling bank (0.9%), Union bank (1.2%) and Wema bank (0.6%) all performed below the industry average.

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