With the 2013 full year results of most of the quoted banks in the public domain as at the weekend, a clearer picture of the banking industry leaders has emerged, reports Festus Akanbi
Last year was characterised by intense competition in the banking industry amidst a harvest of regulatory headwinds which eventually took toll on industry performance by the time the results started to make their ways to the public domain. In spite of the regime of tough regulatory measures put in place by the Central Bank of Nigeria essentially to reduce cost of banking and the attendance reduction in banks' income streams, THISDAY checks from the 2013 full year results of quoted financial institutions released so far showed that a number of banks were, to the admiration of their stakeholders, still able to put up sterling performances to retain their pre-eminent positions in the industry's ranking.
Using indices like total assets, profit before tax, gross earnings, customers deposits and shareholders' funds, front runners in the Nigerian banking industry (Tier-1 banks) remain Zenith Bank, First Bank GTBank, UBA Plc and Access Bank. However, among the Tier 2 banks, the contention were banks that showed promises in their delivery and the names include Skye Bank, Fidelity and Diamond Bank respectively.
Profitability In the area of profitability, Zenith Bank emerged the industry leader, declaring N110.59billion as profit before tax (PBT). In the second position is GTB which recorded a PBT of N107.09billion while First Bank came third with a PBT of N91.346 billion. In the fourth position was UBA with N56 billion in profits after tax, followed by Access Bank in the fifth position with a PBT of N44.9 billion and Diamond Bank with N32.1 billion as profit after tax in the sixth position. Stanbic IBTC recorded N24.6 as PBT to come seventh. FCMB came eighth with PBT of N18.2 billion, Skye Bank followed with N17.13 billion and Ecobank Nigeria which declared a profit before tax of N10.53 billion came tenth. Next was Sterling Bank with N9.31 billion, and it was followed by Fidelity Bank, Union Bank and Wema Bank with profits after tax N9.08 billion, N4.2 billion and N1.9 billion as profit after tax respectively.
Shareholders' Fund Using banks' shareholders' fund to measure performance, Zenith Bank emerged the leader with N509.3 billion and it was followed by First Bank with a shareholders fund of N471.8 billion. GTBank came third with N332.35 billion and in the fourth position is Sterling Bank with N321.74 billion. UBA came in the fifth position with N227.7 billion, while Union Bank came sixth with N188 billion. Access Bank was in the seventh position, posting a shareholders' fund of N172.5 billion, Fidelity Bank with N167 billion to come eighth. In the ninth position was FCMB which recorded a shareholders fund of N144 billion, Diamond Bank with N138.85billion was in the 10th position. Skye Bank which recorded a N94 billion shareholders fund came 11th position and Wema Bank with N41 billion while Ecobank occupied the bottom of the table with N41 billion.
Total Assets Using the 2013 results, First Bank ranked first in terms of total assets, where it recorded N3.9 trillion followed closely by Zenith Bank in the second position with total assets of N3.14 trillion. United Bank for Africa Plc, which recorded N2.6 trillion, came third, while GTBank was in the fourth position with total assets of N2.1 trillion. Access Bank, which shot into Tier 1 category last year, was able to maintain its fifth position with N1.8 trillion in total assets. In the sixth position was Ecobank Nigeria Plc with N1.146 trillion. Diamond Bank, Skye Bank and Fidelity Bank Plc came in the seventh, eighth and ninth category with N1.5 trillion, N1.11 trillion and N1.08 trillion in total assets respectively. In the number ten positions was FCMB which declared a total assets of N1.008 trillion. Sterling Bank which recorded N909.4 billion total assets came 11th, Union Bank with N882 billion was 12th while Stanbic IBTC and Wema Bank took the 13th and 14th positions respectively.
Gross Earnings First Bank also emerged as a clear leader using gross earnings as an index to rank the banks. It posted N396 billion to push Zenith to the second position with a gross earnings of N351.4 billion in 2013. UBA was in the third position. Its gross earnings totaled N264 billion. GTB came in the fourth position with its gross earnings put at N242 billion. Access Bank recorded N207 billion to occupy the fifth position. Diamond Bank came sixth with N181 billion while FCMB which declared N131 billion came seventh. In the eighth position was Ecobank with a gross earnings of N177 billion, Skye Bank and Fidelity shared the nineth position with N127 billion gross earnings while Union Bank was in the 11th position with N121 billion. Stanbic IBTC came 12th with gross earnings of N111.2 billion, Sterling which posted N92 billion in gross earnings came 13th while Wema Bank came 14th.
Customers Deposits In terms of the chunk of customers' deposits in their kitty, First Bank also came top with N2.9 trillion in customers' deposits for the year under review. It was followed by Zenith Bank with N2.27 trillion. UBA grossed N2.22 trillion to take the third position while GTB was pushed to the fourth position with N1.44 trillion. Access Bank was in the fifth position with N1.33 trillion deposits for the year while Ecobank Nigeria came sixth with N1.118 trillion in deposits. Leading the pack of the Tier 2 banks was Skye Bank which had N996 billion in deposits and it came in the seventh position, followed by Fidelity Bank in the eighth position with customers' deposit of N806 billion. FCMB was ranked ninth with a deposit of N715 billion, followed by Sterling Bank, which came up in the 10th position with a deposit of N570.51 billion. Union Bank was in the 11th position with a deposit of N480 billion, followed by Stanbic IBTC -N416.3 billion in the 12th position; Diamond Bank with N1.206 billion is in the 13th position and Wema was at the bottom of the table with a deposit of N217.7 billion.
Numbers Fell However, a common denominator among these banks is the fact that various numbers fell within the range of expectations, a development attributed to a regime of regulatory headwinds which have continued to affect the growth potentials of the Nigeria banks in recent times. The tough regulatory environment where the banks operated in the year under review, according to chief executive officers of some of the banks, included the decision of the Central Bank of Nigeria to raise cash reserve requirements on public sector deposits to 50 per cent from 12 per cent, reduction and removal of a number of fee income lines such as ATM and CoT charges as well as the increase in AMCON levy from 0.3 per cent to 0.5 per cent, amongst others. In spite of these challenges however, a number of banks were still able to raise the hope of their stakeholders by maintaining good ratios although slight reductions were recorded in some aspects.
Bankers Explain One of such banks with promising outlook is Access Bank Plc. Giving an insight into the bank's 2013 results, its Group Managing Director, Mr. Herbert Wigwe, said: "Access Bank's 2013 earnings were impacted by several regulatory changes in the Nigerian banking sector. The bank's balance sheet structure during the period further constrained growth and limited the yield on our earnings asset. However, despite the difficult operating environment, the bank grew its loan book to position it for improved earnings, while driving deposit mobilisation from targeted segments to further reduce cost of funds. We also saw an increase in our non-interest income. As the business continues to grow, risk management remains fundamental to the bank's philosophy evidenced by the reduction in the NPL ratio. "I am particularly excited about the next phase of the bank's evolution. Having articulated our five year strategy plan, we began execution by re-aligning our SBUs to ensure that customer service and delivery are improved at all levels. With our businesses realigned, we are now placing greater emphasis on providing services geared towards women and SMEs in Nigeria, as they underpin the next phase of economic growth. Infrastructure financing is another key focus for us going forward. Throughout the next phase, we will continue to invest in technology to ensure that we build a customer experience that is both innovative and sustainable." There is no doubt that an analysis of the results released on the floor of the Nigerian Stock Exchange validated the bank's capacity for sustainable growth. The results showed an increase in the bank's deposit base from N1.201 trillion to N1.33 trillion, an 11 per cent growth over last year's figure while its loan book rose impressively by 33 per cent, from N609 billion in 2012 to N810 billion in 2013, demonstrating the bank's resolve to empowering critical sectors of the economy. The performance for the financial year under review is a strong testament to Access Bank's positioning as one of Nigeria's Tier 1 banks, the bank said in a recent statement. A glance through the numbers also revealed that the bank's earnings grew to N206.7 billion from N206.4 billion in 2012. Similarly, the bank recorded an improvement in its cost of funds from 4.5 per cent to 4.6 per cent, while Non-Performing Loans ratio decreased to 2.7 per cent from 5.0 per cent, which is owed to the bank's enhanced risk management framework. Also, the bank posted a Profit Before Tax of N44.9 billion, which is a 3.4 per cent decrease compared to the N46 billion recorded for the corresponding period in 2012. Group Managing Director, Zenith Bank Plc, Mr. Godwin Emefiele, who spoke on the bank's performance in 2013 said, "Our 2013 results testify to our consistency in delivering superior performance and returns, driven by our innovative processes, cutting edge technology and committed staff. Despite the increase in the cash reserve requirement for public sector funds, Zenith Bank's total revenue grew to an unprecedented level of N351billion boosted by a 21 per cent increase in interest income. Profit before tax witnessed an impressive growth of 8.3 per cent to N110.59 billion while total assets increased by 21 per cent to N3.1 trillion. Expectedly, profit after tax declined by 5.33 per cent as a result of increase in income tax charged in the current year compared to FY2012, arising from the commencement of tax waivers granted by the Federal Government on income from Bonds and Treasury bills in 2012. Our focus on creation of competitively priced high quality risk assets, is evident in the year on year growth of loans and advances to N1.2 trillion (25.7% growth) with a marginal increase in cost of risk from 0.94% to 0.97%." Another bank which has, in spite of the prevailing tough operating conditions, put up an impressive performance is Guaranty Trust Bank Plc. For its 2013 operations, the bank's total assets and contingencies hit N2.1 trillion, an improvement over its 2012 figure put at N1.7 trillion. The bank recorded a profit after tax of N90.02 billion for its 2013 financial year as against N87.30 billion posted in the preceding year. It however recorded N47 billion as its fees and commissions, an improvement over N45.4 billion in 2012. For United Bank for Africa Plc, a reduction in profit after tax was attributed to the headwinds that shook the banking industry in the year under review. It recorded a profit after tax of N47 billion which was less than the 2012 figure put at N55 billion. However, the bank recorded a marginal improvement in its gross earnings which was N265 billion in 2013 whereas N220 billion was the 2012 figure. UBA's total assets for the period were N2.6 trillion while the figure for the preceding year was N2.3 trillion. It grossed N50 billion as fees and commissions in 2013 as against N48 billion in 2012. All our businesses contributed to the strong Gross Earnings growth, said Phillips Oduoza, Group, Managing Director and Chief Executive Officer of the UBA Group.
"We achieved a good result despite a tough operating environment, demonstrating the strength and resilience of our people and their dedication to implementing our plans in 2013," he explained. Giving an insight into the business behind the bank's earnings, Oduoza said, "Customer-focused, Corporate Banking and Treasury led business model drove the bank's success for the year." He also identified the bank's African focus, shared responsibility of empowering African businesses through its African network, as well as capital and commitment to excellent service delivery as other drivers of business growth. Oduoza assured that the UBA Group had the capacity to continually evolve and come up with new ways to provide high end and value adding products and services to its customers to enable it to thrive in a tough economic environment noting that the bank's management remain committed to achieving set targets for 2014 by maintaining a disciplined approach to the execution of agreed strategic initiatives.
Pressure on Tier 2 Banks A random scan through the results showed that mostly affected by the dip in profit margin in 2013 was the Tier 2 banks. Analysts were of the opinion that these were the banks limited scope in retail business. Diamond Bank which had in 2012 posted a profit after tax of N27.4billion recorded an improvement in its 2013 operation as it declared N32 billion. It also recorded a marginal improvement in its total assets which hit N1.5 trillion in 2013 as against N1.17trillion in 2012. Its fees and commission were put at N30 billion whereas N26.5billion was the figure posted in 2012. For its gross earnings, the bank recorded N181.1 billion up from N139 billion in the preceding year. Fidelity Bank Plc is another bank that experienced dip in its profit after tax which was put at N9.3 billion in 2013 from N21.4 billion in the preceding year. Meanwhile, it recorded an increase in its total assets, posting N1.1trillion, against N914 billion recorded in 2012. Its gross earnings for the period were N127 billion but the figure for 2012 was N119.14 billion. In the case of Sterling Bank Plc, its modest gain in the area of profit after tax in 2012 which produced N7 billion was improved upon in 2013 as the bank recorded N8.2 billion. Its total assets for 2013 were put at N909.4 billion as against N708 billion in the preceding year. Gross earnings was N92 billion in 2013, the figure for 2012 was N69 billion. First City Monument Bank Plc declared a profit after tax of N16 billion in the period under review. In 2012, it posted N15.2 billion. Its gross earnings rose from N117 billion in 2012 to N131 billion in 2013. It recorded N15.2 billion as fees and commissions in 2013, a slight rise from N15 billion in 2012. The bank's total assets grew from N909 billion in 2012 to N1 trillion in 2013. The story is the same for Skye Bank which declared a profit after tax of N16 billion whereas N13 billion was the figure declared in the preceding year. Total assets grew from N1.07 trillion in 2012 to N1.11 trillion in 2013. Stanbic IBTC was not left out in the regime of suppressed performance as it posted a profit after tax of N21 billion in 2013 whereas N10.2 billion. Its total assets were N763 billion in the period being reviewed while the 2012 figure was N677billion. Their gross earnings was put at N111.2billion in 2013 as against N92billion in 2012.
Return to Profitability Year 2013 was significant for Wema Bank Plc as it returned to full profitability having recorded a profit before tax of N1.9 billion for the year ended December 31, 2013 as against a loss of N5.9 billion posted in 2012. The return to full profitability is coming on the heels of the successful completion of the bank's N40 billion Tier 1 capital raising exercise in third quarter(Q3) of 2013. A breakdown of the results showed that Wema Bank ended the year with a total operating income of N20.9 billion in 2013, up 68 per cent from 12.5 billion in 2012. Non-interest revenue rose 25 per cent from N5.6 billion to N7.1 billion, while credit impairment charge improved from N4.9 billion N1.3 billion. Consequently, profit before tax stood at N1.9 billion, while profit after tax was N1.6 billion, compared with a loss of N5 billion in 2012. A further analysis of the results indicated that the bank ended the year with a total assets of N331 billion, up from N246 billion, customer deposits improved from N174.3 billion to N217.7 billion, while net loans and advances to customers rose 34 per cent from N73.7 billion to N98.6 billion. Commenting on the bank's performance, managing director of the institution, Mr. Segun Oloketuyi, said the improved performance followed concerted efforts in implementing the first phase of the bank's turnaround project, despite the increasingly competitive and highly regulated operating environment. "Our transformation plan, Project Leap; a short term growth project with a target of rapidly increasing our market share in our niche segment of retail and SME has started to yield positive results and the bank is on the path of sustainable growth," he said. According to him, the bank recorded improvements in profitability and an increase in customer deposits on the back our retail and commercial businesses. "The capital raising exercise we concluded in 2013 has also increased our capacity to do business and ability to withstand economic shocks. The bank remains committed to improving operational efficiency and focused on containing operating expense growth.