The snapshot of banks’ half year (H1) results showed lenders grappled with challenging environment buoyed by the regulatory induced costs and the Central Bank of Nigeria (CBN) tightening policies.
At the Tier-1 level, the most performing bank is GTBank with the highest net income margin of 33.09 percent and returns on average equity (ROAE) and return on average assets (ROAA) of 25.72 percent and 3.08 percent, respectively.
The crescendo of the analysis is the outstanding performance of Tier-2 bank, Stanbic IBTC.
The lender’s 56 percent growth in profit is the highest bottom-line growth in the entire industry.
Additionally, Stanbic recorded the highest net margin of 25.85 percent to outperform its peers at the Tier-2 level.
On the flip side, Wema Bank, Sterling Bank, and Fidelity Bank were the laggard as they recorded the slowest growth in terms of return on share holders’ investment.
Snap shot of Nigeria banks’ H1 2014 performance index
Source: Company’s financials, businessDay Research
It would be recalled that the apex bank had increased CRR – the minimum cash, as a percentage of customer deposits that each bank must set aside as a reserve, from 4 percent in 2011 to 15 percent for private deposits and 75 percent for public sector deposits.
Consequently, the cumulative net income of the 14 Nigerian lenders that have released half year results showed net income reduced by 4 percent to N247.58 billion, from N259.04 billion the same period of the corresponding year.
Cumulative operating expenses also surged by 11.53 percent to N621.08 billion in HY 2014, compared with N556.65 billion as of HY 2013 as the mandatory Asset Management Corporation charge of 0.5 percent of total assets continues to bleed profits.
Although the CBN has announced the reintroduction of the N0.65 ATM charge, some analysts are of the view that the policy may not salvage lenders from spiralling costs crimping their growth potentials.
Patrick Atyuanya and Bala Augie
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