Nigerian banks have set their eyes on African nations, to tap into the emerging economic opportunities in those countries. The tier-one Nigerian lenders, Access Bank, Guaranty Trust Bank (GTB), United Bank for Africa (UBA) and Zenith Bank Plc, have branches in 21 African countries and their financial highlights for the period ended June 30, 2019, across their African subsidiaries showed a good prospect based on our analysis.
The half-year results showed positive growth across some key financial metrics. The combined operating income of their foreign subsidiaries showed noticeable growth.
Access Bank Nigeria has its presence in six Africa countries – Ghana, Rwanda, Congo, Zambia, Gambia and Sierra Leone. The combined operating income across its subsidiaries grew by 31 per cent from N17.7 billion as at June 2018 to N 23.2 billion in June 2019. Put differently, growth rate of 28 per cent over N25.6 billion realised in H1 2018. The growth of its operating income across the subsidiaries showed that Tanzania’s subsidiary recorded the most growth of about 342 percentage points while Liberia’s subsidiary recorded a decline of 20 per cent to N2.6 billion at half-year 2019 from N3.2 billion in the corresponding period of 2018.
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The 18 subsidiaries of the United Bank for Africa generated a combined operating income of N81.2 billion at half-year 2019. This amounted to a growth rate of 4 per cent over N78.2 per cent made in the corresponding period of 2018.
Zenith Bank’s African subsidiaries
Access Bank’s subsidiaries reported an increase in income growth. At 297 per cent, Sierra Leone topped the rest of its subsidiaries in term of growth in income. However, Zambia’s operating income declined by 19 per cent from N2.0 billion as at H1 2018 to N1.6 billion as at the period ended June 2019.
GTB subsidiaries, on the other hand, reported a combined operating income of N32.7 billion in H1 2019, representing a made a combined operating income of N35.2 billion, representing a 4 per cent growth when compared with N33.8 billion in the similar period in 2018.
The operating expenses (OPEX) of the aforementioned banks stood at N99.9 billion at half-year 2019 from N94.9 billion in the corresponding period June 2018, reflecting a 5 per cent increase. A breakdown of the figures shows that the combined Access Bank’s subsidiaries OPEX declined by 6 per cent from N10.3 billion in June 2018 to N9.6 billion in June 2019. The further insight gained from the banks’ annual reports for the half-year 2019 shows that the operating expenses of the subsidiaries of Nigerian banks in Ghana declined by 40 per cent, closely followed by Zambia where the value declined by 25 per cent from N1.4 billion to N1.05 billion.
On the other hand, Sierra Leone’s operating expenses of the foreign subsidiaries of Nigerian banks grew by 174 per cent which was the highest within the category, jumping from a total of N130.3 million to N357.2 million at the end of June 2019. Similarly, Rwanda’s subsidiaries also reported an increase of 130 per cent from a total sum of N629.1 million to N1.4 billion during the reference period, which was more than doubled the value recorded in 2018.
Zenith Bank’s subsidiaries’ combined OPEX slipped slightly by 1 per cent, while UBA and GTB’S OPEX increased by 10 per cent and 7 per cent respectively.
OPEX of the Nigerian banks’ subsidiaries in The Gambia declined by 24 per cent from N448 million in 2018 to N339 million at the end of H1 2019. In like manner, OPEX of the subsidiaries in Ghana stood at N19.4 billion as of June 2018 as against N19.1 billion in the similar period 2019. This reflects a decline of 2 per cent. However, Sierra Leone’s operating expenses rose by 17 per cent fromn1.4 billion in H1 2018 ton1.6 billion to a similar period of 2019.
The banks reported a combined profit after tax (PAT) of N53.9 billion, representing a growth of 23 per cent over N43.7 billion recorded in the corresponding period of 2018.
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In term of PAT growth, Access Bank reported an increase of 98 per cent from a combined total of N5.2 billion in H1 2018 to N10.3 billion in a similar period in 2019. Sierra Leone’s subsidiaries got the most growth as PAT jumped to N136 million, a 3725 per cent growth compared to N3.5 million recorded in the corresponding period of 2018.
Ghana’s subsidiaries combined PAT grew by 128 per cent from N3.9 billion in H1 2018 to N9 billion in the corresponding period of 2019. On the other hand, Congo DRC’S subsidiaries got the least growth rate of about 6 per cent, while Rwanda and Zambia’s subsidiaries recorded a decline of 11 per cent and 29 per cent respectively.
GT Bank closed the half-year ended June 2019 with a 44 per cent growth in its PAT across its subsidiaries, from N8.8 billion in H1 2018 to N12.7 billion in H1 2019. Observation made showed that Kenya’s subsidiaries got the most growth in PAT by 111 per cent to N1.1 billion from N567 million in the corresponding period of 2018. Other subsidiaries recorded an improvement in PAT except for Liberia and Sierra Leone whose PAT declined by 28 per cent and 2 per cent respectively.
