Africa Prudential’s profit in the second quarter increased to a record on a surge in interest on treasury bills as the company’s margins improve.
Net income for the firm that specializes in creating client-company registers of shareholders surged by 229.09 percent to N864.28 million in the first six months through June 2017, from N262.62 million a year earlier.
That compares with a N500 million average of 7 analyst estimates compiled by BusinessDay.
Africa Prudential increased profit margins, a solid asset base and a strong working capital could magnify shareholders wealth.
The growth in profit was due to a 635.91 percent surge in interest on treasury bills to N668.92 million in the period under review while investment income increased by 57.57 percent to N1.490 billion in June 2017 from N960 million as at June 2016.
Africa Prudential’s operating ratio- a measure of efficiency- dropped to 32.57 percent in June 2017 as against 37.55 percent the previous year.
The smaller the ratio, the greater the organization’s ability to generate profit if revenues decrease.
Net margin, another measure of efficiency, increased to 57.98 percent in June 2017 as against 27.32 percent as at June 2016. In this case a higher ratio means a company is efficient.
Africa Prudential has utilized the resources of its owners in generating a higher profit as return on equity (ROE) moved to 17.53 percent in June 2017 from 6.67 percent as at June 2016.
Return on assets (ROA) followed the same growth trajectory has it increased to 4.63 percent in the period under review from 1.56 percent as at June 2016.
The company said during its fourth annual general meeting (AGM) in Lagos- where it declared a dividend of 30k per ordinary shares- that it is steadfast in offering value to shareholders amid a tough operating environment.
Nigeria’s economy contracted by 0.52 percent in 2016, the first recession in 25 years, according to a recent report by the National Bureau of Statistics (NBS).
However, the introduction of a new foreign exchange window by the central bank has eased liquidity in the foreign exchange market.
Analysts are of the view that the uptick in oil output on the back of relative peace in the Niger Delta region and the new monetary policies by the apex bank could correct the lull in the capital market.
The Nigerian Stock Exchange (NSE) main index for equities has gained 25 percent this year, driven by bank stocks.
IMF has raised projections for Nigeria’s economic growth this year to 0.8 per cent. These forecasts were revised up mainly to reflect high oil production due to security improvements Read more:
Further analysis of Africa Prudential shows financial assets (held to maturity) increased by 41.57 percent to N9.91 billion, thanks to a 90.57 percent rise in treasury bills to N8.65 billion.
The company’s shares gained 4.68 percent to close at N 3.13 as of 2:00pm close of trading on Wednesday, valuing it at N6.26 billion.
BALA AUGIE
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