The Oasis Reporters
September 9, 2019
Enhanced business efficiency driven mostly by cutting edge technologies has seen Nigeria’s top five Tier One banks grossing a total profit of N416.55 billion in the first half of this year
The average profitability of the top five banks rose by a marginal one per cent to 34.14 per cent from 33.35 per cent in the corresponding time last year according to a report by a market intelligence report published by The Nation newspaper at the weekend, showing all top five banks as having witnessed steady growth across key performance indicators with the exception of Stanbic IBTC, which suffered a decline in profitability.
Shareholders of the top five banks, which traditionally pay cash dividends twice yearly, will get N44.22 billion as interim cash dividend for the period under review. It will be based on the interim dividend per share ranging from 20 kobo to N1.
The top five banks, by market capitalisation, otherwise known as Tier-1 banks, are Guaranty Trust Bank (GTB) Plc, Zenith Bank International Plc, Stanbic IBTC Holdings Plc, Access Bank Plc and United Bank for Africa (UBA) Plc.
Banks use the January to December cycle by extant regulations, making June 30, the end of the first half of the year.
The top-five banks’ gross earnings rose by 9.79 per cent from N1.17 trillion in the first half of last year to N1.29 trillion in the first half of this year. Their total pre-tax profit grew by 12.08 per cent to N416.55 billion in first half 2019 compared with N371.66 billion in the comparable period of 2018. Total net profit increased by 13.22 per cent from N303.8 billion to N343.96 billion.
The average gross earnings within the top-five group increased from N234.79 billion in the first half of 2018 to N257.77 billion this year. Average profit before tax also improved from N74.33 billion to N83.31 billion. After taxes, the average net profit increased from N60.76 billion to N68.79 billion.
GTB, Nigeria’s largest financial institution, remains the most profitable in terms of profit size and intrinsic profit-making capability. GTB’s pre-tax profit margin, which measures the underlying profitability of a company’s operations, increased by almost four percentage points from 48.37 per cent to 52.19 per cent, more than 14 percentage points ahead of its closest rival on pre-tax profit margin. It led on profitability with pre-tax profit and net profit after tax of N115.8 billion and N99.13 billion respectively.
Zenith Bank, Nigeria’s second most capitalised bank, maintains its lead as the bank with the highest gross earnings, raking N331.6 billion within the first six months of this year. Access Bank which consummated a landmark merger recently, took major leaps to become the second on the top-line ranking and third on profit-size chart.
Stanbic IBTC’s pre-tax profit margin dropped from 44.42 per cent to 38.04 per cent, depressing the actual pre-tax profit from N50.73 billion to N44.65 per cent. After taxes, net profit declined from N50.73 billion to N43.08. However, Stanbic IBTC will be paying the highest interim dividend of N10.24 billion, representing interim dividend per share of N1. GTB and Zenith Bank will pay interim dividend per share of 30 kobo each, while Access Bank will pay 25 kobo and UBA paying 20 kobo.
Key extracts of its audited report showed that GTB’s profit before tax rose by 5.6 per cent to N115.8 billion in the first half of 2019 as against N109.6 billion recorded in the corresponding period of 2018. Profit after tax also improved from N95.58 billion to N99.13 billion. Gross earnings however declined from N226.63 billion to N221.87 billion. Earnings per share improved from N3.38 to N3.50.
Zenith Bank grew gross earnings by 3.0 per cent from N322.2 billion in the first half of 2018 to N331.6 billion in the corresponding period of 2019. Profit before tax rose by 4.0 per cent to N111.7 billion in first half 2019 compared with N107.4 billion in comparable period of 2018. Net profit rose from N81.74 billion in first half 2018 to N88.88 billion in first half 2019. With this, earnings per share improved by 9.0 per cent from N2.60 to N2.83.
UBA’s profit before tax rose by 21 per cent, while profit after tax increased by 29.6 per cent. The gross earnings grew by 14 per cent and the profit before tax rose to N70.3 billion in first half of 2019 as against N58.1 billion in the corresponding period of 2018.
After taxes, net profit increased from N43.8 billion in the first half of 2018 to N56.7 billion. Gross earnings rose from N257.9 billion in the first half 2018 to N293.7 billion in the first half of 2019.
Stanbic IBTC Holdings increased gross earnings from N114.21 billion in first half of 2018 to N117.37 billion in first half of 2019. Profit before tax dropped from N50.73 billion to N44.65 billion. Profit after tax declined from N43.08 billion to N36.25 billion. With these, earnings per share dropped from N4.16 in first half 2018 to N3.42 in first half 2019.
Access Bank, which released its half-year results at the weekend, grew top-line by 28.1 per cent from N253 billion in first half 2018 to N324.3 billion in first half 2019. Profit before tax jumped by 61.6 per cent from N45.8 billion to N74.1 billion while profit after tax leapt by 59 per cent from N39.6 billion to N63 billion. Earnings per share thus improved from N1.38 to N1.94.
These results have clearly shown that notwithstanding the vagaries and undulating movement of stock prices in the equities market, considerable confidence of Return On Investment still exists thus giving shrewd investors the clout to continue to play on the floor of the Nigerian Stock Exchange (NSE).
Source: The Nation