To provide Investors with clearer insight into how well banks did on a comparative basis in the 9 months to September 2019, a brief summary of comparative data was put together by Proshare and its associate analysts to put context to the three-quarter performances of selected local deposit money institutions. Proshare Nigeria Pvt. Ltd. Total Income Growth; Flat is Beautiful?
Gross earnings for most of the banks were flat in 9 months 2019 compared to the contemporary period of 2018, but total income growth showed marked disparity amongst banks ( see table 1 below ).
Table 1 Bank Performance Sorted By Comparative Total Income Growth Proshare Nigeria Pvt. Ltd. Access Bank posted the fastest growing total income performance over the period (+114%) with Ecobank Nigeria pulling up from the rear (+1%).
The Thing About Cost
Cost has become a major concern of Nigerian bank’s lately because as gross earnings slow down the best chance of sustaining profitability is by reducing cost, therefore, bank cost- to-income ratios (CIR) are becoming crucial in protecting their bottom lines. Operating expenses are equally a major challenge as banks try to keep net operating income up. In the 9 months to September 2019, GT Bank appears to have been most successful in taming cost as operating expenses fell by -2% on the other hand Access Bank appears to have had the most difficulty with operating expenses in the first three quarters of 2019 as its operating expenses increased by +40%, an explanation for this would be that its merger with Diamond Bank in the course of the period resulted in a temporary spike in expenses as the new bank tried to work out optimal operating levels and establish the most efficient cost structure ( see Table 2 below ).
Table 2 Bank Performance Sorted By Comparative Operating Expense Growth Proshare Nigeria Pvt. Ltd. Cranking The Profit Machine
Most local Nigerian banks found making profit in 2019 a difficult enterprise as slow economic growth (GDP grew by +1.94% in Q2 2019) and rising expenses (Inflation rate was +11.24% in September 2019) conspired with declining effective consumer demand to put pressure on bank’s gross earnings over the first three quarters of the year. Access Bank , nevertheless, leaned against the harsh economic headwinds to pull up profit before tax by +47%, this was impressive given that analysts had earlier thought that the bank would struggle to […]
