NPF Microfinance bank profit spikes on cost cut

NPF Microfinance Bank Plc has made a leap forward in profit, thanks to cost cuts as the company has intensified efforts toward deepening lending to Small and Medium Enterprises (SMEs).

For the first nine months through September 2016, NPF Microfinance Bank’s net income increased by 33.51 percent to N687.04 million from N514.59 million the previous year.

The growth at the bottom line was due to a 26.84 percent drop in operating expenses to N1.09 billion despite a 19.55 percent decline in interest income.

In order to give loans to police officers at a single digit interest rate, the Nigerian microfinance bank has secured intervention fund from both the Bank of Industry (BOI) and the Central Bank of Nigeria (CBN).

“All Policemen are to transfer their salary accounts to the bank so that they can benefit from their cheap loans, said Akin Lawal managing director of the bank.

“The NPF Microfinance Bank Plc has continued to be a good flagship of all Police investment outfits with very well trained staff and bespoke service delivery to their various customers,” said Lawal.

The Nigerian authorities have announced the establishment of a new Development Bank of Nigeria (DBN) that will specially focus on small businesses.

It should be noted that the DBN will kick start with an initial capital of $1.3 billion from the World Bank, African Development Bank and European Investment Bank.

“The focus of DBN is SMEs and giving them low -cost loans,” said Kemi Adeosun Minister for Finance. “We need to get the money into the hands of smaller business that make 50 percent of our GDP,” she said.

She noted that the bank is now ready to ‘take off’, as soon as the last step, appointing a managing director, is completed.

Experts are of the view that the SMEs can pull the country out of the recession.

Nigeria’s economy shrank by 2.20 percent in the third quarter of the year, according to data from the NBS. The IMF forecasts output will decline by 1.7 by 2016, the worst recession in 25 years.

Unemployment rate stands at 13.3 percent with 22.45 million Nigerians without a job, according to the NBS.

While there are moves by authorities to lend to small businesses a low interest rate, lack of proper books of accounts, high VAT rates, high import duties and decrepit infrastructure remain a stumbling block to the growth of small businesses.

According to the World Bank in August of this year, there were roughly 37 million micro, small, and medium-sized enterprises (MSMEs) operating in the country.

NPF Microfinance Bank’s share price closed at N1.02 on the floor of the exchange while market capitalisation stood at N2.33 billion. The Bank’s ytd has shed -7.36 percent vs -11 percent NSI-ASI.

BALA AUGIE