Investors and financial analysts use a wide range of key ratios including margins, return on assets (ROA), return on equity (ROE), among others to examine the financial health of companies. However, profit per employee is an important metric often ignored during this examination.
Profit per employee ratio is a productivity indicator that measures how well a company creates wealth by converting the talent in the organization into value, and this gives an insight into how efficient the company runs its business since employees form an integral part of the organization.
Although some analysts use revenue per employee ratio, we adopt profit per employee ratio since the idea is to have an insight of the productivity of an average staff bearing in mind all costs the company spent to keep the employee relative to the profit accrued to the firm.
Profit per employee is calculated as a company’s total profit divided by its current number of employees, and the ratio is best used to assess companies in the same industry. The higher the ratio, the better for the company as it translates to greater productivity and efficiency.
BusinessDay compiled the number of employees and profit before tax of each commercial bank listed on the Nigerian Stock Exchange (NSE) using the lender’s 2018 audited financial results since the components needed for the evaluation are not entirely contained in recent quarterly results.
It is noteworthy that out of 13 commercial banks actively trading on the NSE, employee details are not contained in the results of two including First Bank of Nigeria Holdings Plc and Ecobank Transnational Incorporated Plc, while Access Bank’s figures reflect its performance before merging with defunct Diamond Bank.
- Guaranty Trust Bank Plc.
Nigeria’s biggest bank by market capitalization, Guaranty Trust Bank Plc, is not only big by market value but also utilizing its investment in human capital optimally for profit.
GTBank led other lenders in the country with a profit per employee ratio of N63.52 million. This indicates the bank realized an average of N63.52 million from each of its employees last year.
The bank generated a pre-tax profit of N216 billion in 2018, the second-biggest profit in the nation’s banking industry, with only 3,394 employees. This is the lowest number of employees among all the four tier-one banks considered.
- Zenith Bank Plc.
The second on the list is Zenith Bank Plc. The tier-one lender trailed with a profit per employee ratio of N37.05 million, this is despite emerging the most profitable bank in the country in 2018.
Zenith Bank’s pre-tax profit stood at N231.69 billion last year, but when this is compared to its 6,253 employees, the company made an average profit of N37.05 million from each of its workforce. This shows the bank wisely utilized its human resources.
- Access Bank Plc.
Access Bank took the third position since figures from the bank’s financials before consolidation were used. For the 3,406 people that worked with the tier-one bank in 2018, each of them was able to return on average N30.3 million to the bank as profit before tax, bringing the bank’s pre-tax profit to N103 billion for the period.
- Stanbic IBTC Bank Plc.
Stanbic IBTC Bank Plc was the first mid-tier bank to feature in this ranking having recorded a profit per employee ratio of N30 million. The bank had N88 billion as profit in 2018 when this figure is divided by the bank’s 2,933 employees, each staff’s return would translate to N30 million per annum for the bank.
- Fidelity Bank Plc.
Nigeria’s mid-tier bank, Fidelity Bank Plc, despite its N25 billion profit before tax in 2018 made it among the five (5) banks with the most productive employees. The bank was able to do more with 2,908 workforce population, thereby achieving a profit per employee ratio of N8.6 million per annum.
