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Published On: Tue, Sep 6th, 2016

Account holders, cannon fodder for banks’ survival

The Half year 2016 financial statements of many commercial lenders showed that their interest income went down or only appreciated marginally, but on the other hand, their fee and commission income grew significantly during the time under review.

Banks have devised different charges to augment the shortfalls in their interest income, which for many of them grew just marginally in H1 2016.

Though COT and ATM charges have been abolished, banks now annual maintenance account fee, N100; annual ATM maintenance fee, N100, SMS fee, N4 per message sent to account holders, N50 stamp duty which was supposed to be levied on current accounts deposits  only, some banks apply it to savings account deposit.

And the gains they would have recorded from their loans and advances to customers were eroded by their high non-performing loans which has overshot industry 5 per cent and said to stand at around 12 per cent.

Of the N267.9billion revenue FirstBank of Nigeria Holdings (FBNH), the parent company of First Bank of Nigeria Ltd generated in the H1 2016, which was a-1.2% dip from the N271.3 billion it earned in H1 2015, interest income was N126.1 billion, representing a -5 per cent decline from the N132.7 billion the group grossedby the corresponding period of the last year.

But FBNH’s fee and commission income shot up by 52 per cent to N94.1 in H1 2016 from N61.9 in H1 2015.

The holdings was able to increase its operating income by 13.1 per cent to N220.1 billion, it also cut its operating expenses by almost the same percentage to N104.3 billion.

FBN which contributes the bulk of the group’s revenue, had rationalised some of its unviable branches, and consequently cut down its workforce earlier in the year.

The economic crunch in the country took a heavy toll on FBNH in the first six months of 2016 as many of its debtors were able to service their loans and advances, making its impairment provision to increase astronomically by 209.6 per cent to N69.9 billion from N22.6 in H1 2015.

This is despite the fact that it was able to grow its loans and advances by 16.2 per cent to N2.1 trillion and its customers deposit to 4.2 per cent to N3.1 trillion in H1 2016.

 

Accordingly, its profit after tax (PAT) plummeted by 10.5 per cent to N35.9 in the period under review from over N40 billion in H1 2015.

Similarly, Union Bank of Nigeria, which is presently being resuscitated, in H1 2016 had N44.3 billion (a 3.9 per cent increase from N42.69 billion it got in H1 2015) of  its N60.1 billion gross revenue from interest income, which it earned fee and commission almost doubled to N6.3 billion (H1 2015: N3.8 billion).

Checks on its H1 2016 financial result showed that over 27 per cent of its fee and commission income came from E-business fee income/charge, amounting to N1.7 billion from just N180 million in H1 2015.

The bank, whose gross revenue went up by 8.45 per cent in the first six months of the year, also boosted its operating income by 5.69 per cent to N37.9billion and succeeded in cutting its expenses marginally by 0.73 per cent to N29.4 billion.

And like FBNH, UBN’s impairment charges skyrocketed by a whopping 195.3 per cent to N8.78 billion in H1 2016 as against the N2.97 billion provision it had made during the corresponding period last year.

 

But unlike FBNH, Union Bank was still able to grow its PAT by 35.7 per cent to N8.76 billion in H1 2016 (H1 2015: N6.36 billion).

And in spite of the harsh operating environment, between December 2015 and June 2016, the bank increased its loans and advances to customers to N 475.9 billion from N366.7 billion and deposits from customers climbed to N611.9 billion from N570.6 billion, up by 7.2 per cent.

Union Bank’s earnings (loss) per share stood at 52 kobo in H1 2016, against 38 kobo as at June 2015.

On its part, GTBank’s H1 2016 financial statement indicates that its interest income like that of most commercial lenders, went southward by -3.6 per cent to N109.8 billion, although its interest expenses also went down by 9.2 per cent to N30.7 billion during this period.

The bank augmented the decline in its interest income by increasing it fee and commission by 4.1 per cent to N36.1 billion (H1 2015:24.6 billion).

In the first half of the year, GTBankhad gross earnings of N209.9 billion (H1 2015: N153 billion) and fee and commission income contributed  N36.1 billion, an impressive 46.6 per cent increment from the N24.6 billion in the same period last year.

And like most banks, GTBank’simpairment provision jumped by a worrisome 531 per cent to N37.5 billion in H1 2016 from N5.95 billion in H1 2016.

It would be recalled that the apex bank had directed banks to write-off their toxic loans at the end of the 2016 financial year, which analysts would eventually adversely affect their profitability at the end of the day.

Despite its rising NPL, the bank succeeded in growing its profit after tax by 45.1 per cent to N 77.5 billion from N53.4 billion, with fee and commission playing significant role in this.

GTBank’s loans and advances to customers also went up by 13.8 per cent to N1.56 trillion during the period under review from N1.37 trillion in the corresponding period the previous year.

In the same vain, the lender got 22.5 per cent more deposits from customers, amounting to N1.97 trillion in H1 2016 instead of the N1.61 trillion it had in H1 2015.

The bank’s earnings per share stood at N1.84 in H1 2016 against 95 kobo in H1 2015.

Ironically, Zenith Bank feeand commission income plummeted by 22.6 per cent to N15.03 billion in H1 2016, from N19.4 billion in the same period last year.

The bank’s interest and similar income contributed N181.4billion (a marginal 2.9 per cent increase from N176.2 billion in H1 2015) to its N214.8billion gross revenue in H1 2016, which went down by 6.2 per cent from N229.1 billion in the corresponding period last week.

And expectedly, Zenith Bank PAT declined by 15.7 per cent to N44.8 billion in H1 2016 from N53.2 per cent in H1 2015.

Moreover, the bank slashed its operating cost by 6.8 per cent to N43.1 billion as at June 2016 from N46.3 billion at the same period last year, its personnel cost increased slightly by 0.6 per cent to N34.6 billion in H1 2016, despite laying off some of its staff earlier in the year.

Zenith Bank’s earnings per share was N1.43 in H1 2016, against 81 kobo in H1 2015.

 

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