Leveraging on acquisition for enhanced customer service

With more business locations after its acquisition of Mainstreet bank last year, Skye bank plc, is positioned to enhance its customer service delivery, attract cheaper deposits, with a view to lowering its cost of funds and enhancing its capacity to create profitable risk assets and have a strong buffer for liquidity.

The bank’s cost of funds improved from 4.6 percent in December 2013 to 4.3 percent in December 31, 2014 financial year end.

“I am glad to report that our deposit mobilization initiatives with bias for low-cost funding are beginning to show positive results. Compared to 2013 when we grew our deposits marginally by 4.0 percent, our deposits this year grew by 15.7 percent, to N952.30 billion, from N823.33 billion”, Timothy Oguntayo, group managing director/CEO said.

Also, the efficiency of the deposit mix improved as demand, savings, and domiciliary deposits accounted for 37.0 percent, 13.6 percent, and 27.3 percent, while term deposits reduced from 31.0 percent to 22.1 percent.

Skye bank aims to expand its network of electronic solutions with a view to providing increased options of flexible payment and withdrawal systems for its customers, to enable them undertake virtually any form of transaction with ease.

“As a customer-centric bank, we would continue to reinvigorate our service touch points and platforms with a view to delighting customers and providing them with reasonable choices to satisfy their needs”, Oguntayo said.

However, the bank recorded total revenue of N134.78 billion, compared to N126.67 billion last year, which reflected a marginal growth of 6.4 percent.

The bank’s profit before tax and profit after tax fell by 46.7 percent and 47.4 percent to N10.47 billion and N9.74 billion respectively as a result of elevated impairment charges recorded in the year.    

Aside a higher cost profile, the bank experienced pressure on profitability in 2014. For instance, interest expense on savings deposits grew by 53.8 percent from N1.32 billion in 2013 to N2.03 billion, reflecting its improved low-cost deposit mobilization and a fixed interest marked to the Monetary Policy Rate (MPR).

The bank saw significant reduction in some non-interest income items, where telex transfer commission fell by a huge 32.6 percent, from N2.58 billion to N1.74 billion), while Commission On Turnover (COT) reduced by 28.1 percent from N4.23 billion to N3.04 billion.

In spite of a challenging year, the bank grew its balance sheet size by 26.8 percent, with total assets at N1.42 trillion, from N1.12 trillion in 2013. The performance was largely driven by loans and advances, cash and short-term funds, property, plant, and equipment, and intangible assets.

“In growing the balance sheet, our focus will be efficiency and measured growth, as opposed to a quest for expansion that is mainly based on more size”.