The three Nigerian banks released their 2012 end of year result.
Zenith, GTB and Access Banks have released their 2012 financial year end results, leading the host of other banks whose results are still being awaited.
The results, which industry watchers estimated would be out in March, highlighted uptick in deposit growth, weak loan growths, jump in impairment charges, and non-performing loan (NPL) ratio improvements.
Zenith Bank’s net loans were up 11 per cent to N989.8 billion from the previous year, while total assets increased by 13 per cent year-on-year (YoY) to N2.6 trillion. Total operating income was up 16 per cent YoY to N227.3 billion while non-performing loan (NPL) ratio came in at 3.1 per cent in FY12, down from 3.2 per cent in 9M12 and 4.0 per cent in FY11. Gross earnings of N307 billion, up 26 percent from the previous year, while profit before tax grew by over 51 percent to N102 billion and doubled PAT to N101 billion. NIM also improved to 8.16 per cent against the 7.76 per cent achieved in 2011.
Godwin Emefiele, GMD/CEO Zenith Bank, while commenting on the results said the bank was delighted to present such figures despite the challenges of the year.
“We are indeed delighted to note that amid the challenging business environment witnessed in 2012, notably the restrictive monetary policies and the double digit headline inflation rates, Zenith bank delivered yet another year of strong performance and consolidated our leadership in the Nigerian banking industry through the commitment and dedication of our workforce and enhanced operational efficiency,” he said Access Bank, which also released its 2012 results revealed its gross earnings up 54 per cent to N208.3 billion; Profit before Tax of N44.9 billion, up 86 per cent from N24.1 billion in FY2011; Operating income of N142.6 billion; Net interest margin up at 7.7 per cent from 5.2 per cent in 2011; Cost to income ratio of 61 per cent down from 66 percent in 2011 (inclusive of one-off merger related expenses); return on average equity of 17.7 per cent compared to 8.6 per cent in the previous year, liquidity ratio of 60 per cent, capital adequacy ratio of 23 per cent, non-performing loans ratio down to 5.3 per cent from 9 per cent in 2011, and a 2012 dividend of 85k per share, up 42 percent.
Aigboje Aig-Imoukhuede, the Group Managing Director of Access Bank, commenting on the 2012 results, said following the acquisition of Intercontinental Bank in the prior year, the bank focused on building a sustainable platform for unlocking the merger synergies.
“Our performance during the period testifies to the benefits we have begun to enjoy from this acquisition. We are humbled by the level of stakeholder support and goodwill we enjoyed throughout the business integration activities which we engaged in during the year. The Group maintains a conservative approach to balance sheet management with Access Bank’s capital adequacy and liquidity ratios well above regulatory guidelines,” he said.
Major moves by the bank in the financial year ended include the Issuance of $350 million LSE listed Eurobond to support trade and structured finance business, the selection of PWC as External Auditor successor to KPMG among others. GTBank’s result Guaranty Trust Bank plc also announced its Audited Financial Results, in accordance with IFRS, for the year ended December 31, 2012, and declared a Year End dividend of 130 kobo per share (Subject to shareholder approval at GTBank’s Annual General Meeting to be held on April 29, 2013) bringing the total year dividend to 155kobo.
Commenting on the results, Segun Agbaje, Managing Director and CEO of Guaranty Trust Bank plc, attributed the Bank’s success to its adherence to a defined growth plan, high corporate governance standards, innovation, professionalism, integrity, discipline and service excellence.
The bank’s net loans were up 10 per cent YoY to N779.1 billion, total assets increased by 8 per cent YoY to N1.7 trillion. NIR declined by 8 per cent YoY. The NPL ratio came in at 3.4 per cent in 2012, with coverage ratio of 70 per cent. This compares with NPL and coverage ratios of 3.5 per cent and 113 per cent respectively in 2011. Profit after tax for the year was N87.30 billion (31 December 2011: N51.74bn) an increase of 68.72 per cent.
More Clarity While analysing and highlighting the high and low points of the results, an expert said banks need to make some more clarifications while explaining how they arrived at their figures. Adesoji Solanke, Banking Analyst (SSA), Renaissance Capital Renaissance Capital, an investment bank, while commenting on Access Bank results, said there was need for more clarity on the bank’s Net interest revenue (NIR) (a measure used by businesses to show how much money is being gained or lost on interest payments) trends in the fourth quarter of the said year.
“The NIR yield came in at 2.7 per cent, down from 3.2 per cent in 9M12 and 3.4 per cent in 2011. Total operating income was up 41 per cent YoY to N142.6 billion, versus our N150.9 billion forecast. Costs grew by 26 per cent YoY but down 59 per cent quarter on quarter. We struggle to relate the reported fourth quarter cost trends with management’s guidance for the quarter,” he said.
He highlighted improved non-performing loan (NPL) ratio, pick-up in deposit growth in the fourth quarter, impressive dividend payout as encouraging points in the results but stated that Net interest margin (NIM) (a measure of the difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders) compression, poor NIR trends in the fourth quarter, spike in impairment charges in the fourth quarter and weak loan growth are issues of concern.
“These numbers were in line with our expectations of a challenging fourth quarter for Access Bank” the firm said. “Running through the details reveals a number of quarterly volatilities which we need clarity from management on, particularly on NIR, costs and provisions.”
Analysing GTB’s Figures, he said: “This was a good set of numbers from GTBank which was in line with our expectations”. According to him, “it remains the best-in-class Nigerian bank on many fronts. We think that given the potential revenue and cost pressures in 2013, asset growth would be key to GTBank’s ability to offset these pressures as it is already highly operationally efficient” he said. He however highlighted poor NIR trends and weak loan growth as concerns in the bank’s figures.
“Overall, these were a good set of numbers from Zenith Bank which reflect the scope for earnings improvement that can be derived from optimizing its cost base” he said, on Zenith Bank’s figures. “We think this efficiency focus would be more important in 2013 in light of potential Net interest income (NII) pressures from lower interest rates, regulatory pressures on NIR and the increase in the AMCON levy.”
Upside of the bank’s figures include good cost control translating to efficiency gains, improvement in cost of funds, NPL ratio improvements, while concerns include jump in impairment charges in the fourth quarter and sluggish NIR growth.
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