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Skye Bank Plc leverages on acquisition, grows profits by +81% in 1st Qtr
By: Dennis Okonne |
The acquisition of Mainstreet Bank by Skye Bank has resulted in organic growth in the branch network and it has strengthens its retail and commercial banking business by contributing about 78% of total loans, 36% of total deposits and 18% of profit before tax of the bank. It has also enhance the enlarged bank’s share of the market and caused the bank to grow its turnover by 6.4% in its audited result 2014. The growth is expected to be sustained in 2015 with an IMF projection of +3.6%. There were strong synergies in its corporate banking business and SME as it provide stable funding for their operations.
Despite the difficult operating environment and other macro-level challenges faced by the bank, it recorded an impressive result in its first quarter 2015 financial profile. It recorded positive indices in all ramifications which suggest that its acquisition of Mainstreet Bank has beginning to yield fruits. Their gross earnings grow from N34.331 billion previously to N42.379 billion, which translates to an increase of +23.44%. Similarly, its profit before tax rises by +81.40% from N3.452 billion previously to N6.262 billion. Its profit after tax quantum leaps by +81.13% from N2.766 billion in the preceding year to N5.010 billion. If the bank sustains this trend to the last quarter, payment of dividend will be inevitable.
Shareholding Structure:
Total Number of shareholding = 13,219,334,676 shares
Stanbic Nominees Nig. Ltd. = 1,004,626,756 shares (7.60%)
Other shareholders = 12,214,707,920 shares (92.40%)
Market Statistics:
Shares in issue = 13,219,334,676
52 Weeks High = N2.87
52 Weeks Low = N1.74
52 Weeks Change = 65%
Last Price = N2.28
P/E Ratio = 3.09
EPS =0.73688
Price/Book Value = 0.23
Dividend = no dividend
Bonus = 1 for 20
Origin of Skye Bank Plc: Skye Bank Plc is a public limited liability company incorporated as “Prudent Merchant Bank Ltd” on 8th December, 1989. It was issued a banking license in 1990 to carry on all classes of merchant banking business. The bank’s name was changed to Prudent Bank Limited in 2000 following the approval of commercial banking license and it commenced operations as a commercial bank in 2001. Skye bank plc came into being as a result of the merger of five (5) banks namely- Prudent Bank Plc, Eko International Bank Plc, Reliance Bank limited, Cooperative bank Plc and Bond Bank Plc in January 2006. It also acquired Mainstreet Bank limited in December, 2014.
The Bank’s international subsidiaries are as follows-
- Skye Bank Sierra Leone. It commenced business in 2008
- Skye Bank Gambia Limited. It commenced business in July, 2009.
- Skye Bank Guinea. It commenced operations in March 2010.
Financial Highlights: Despite the overwhelming macroeconomic challenges of the year under review, the company posted outstanding financial profile.
Their gross earnings grow from N127.340 billion in the preceding year to N136.742 billion, translating to an increase of +6.4% over the previous year’s. However, its profit before tax slides significantly from N17.136 billion previously to N10.474 billion, a decrease of -46.7%. Similarly, its profit after tax also dips by -47.4% from N16.023 billion previously to N9.741 billion. Consequently, the board appropriated a bonus of one for every twenty shares held and no dividend. Earnings per Share (EPS) grew by +17.33% to N2.37 from N2.02 last year.
Analysing the balance sheet further, its interest expense on savings deposits grew by 53.8%, from N1.32 billion in previous year to N2.03 billion, which reflect low-cost deposit mobilization and a fixed interest marked by the Monetary Policy Rate (MPR). There is also significant reduction in non-interest income items, where Telex transfer commission fell by -32.6%, from N2.58 billion to N1.74 billion, while commission on turnover (COT) was reduced by -28.1% from N4.23 billion to N3.04 billion. Finally, the total assets grew by +26.8% from N1.12 trillion previously to N1.42 trillion.
The bank’s growth in revenue was largely driven by loans and advances, cash and short term funds, property, plants and equipment, and intangible assets. However, fiscal and monetary policy changes within the year, impacted on their business and operations.
Audited Result (FY 2014) Snapshot
| 2014 (N) | 2013 (N) | % Change | |
| Gross Earnings | 136.742 B | 127.340 B | +6.4 |
| Net Operating Income | 69.335 B | 68.580 | +1.10 |
| Profit Before Tax | 10.474 B | 17.136 B | -46.7 |
| Taxation | (733 M) | (1.113 B) | -34.14 |
| Profit After Tax | 9.741 B | 16.023 B | -47.4 |
| Retained Earnings | 33.686 B | 0 | – |
| Deposit | 952.30 B | 823.33 B | +15.7 |
| Net Assets | 1.42 T | 1.12 T | +26.8 |
| Earnings Per Share (EPS)/(K) | 75 K | 144 K | -47.92 |
T=Trillion; B= Billion; M=Million; N=Naira.
Graphical Illustration of the key indices of the Bank.
Price resurgence on the Stock Exchange was as a result of its impressive first quarter 2015 result where-
- Its Gross Earnings grew by +23.44% to N42.379 billion compared from N34.331 billion same period in 2014
- Interest Income leaped from N27.099 billion to N30.522 billion, translating to an increase of +12.63%.
- Profit before tax increased by +81.40% to N6.262 billion compared from N3.452 billion previously and
- Profit after tax rose by +81.13% to N5.010 billion compared from N2.766 billion recorded in 2014.
- Earnings per Share (EPS) is 38 kobo from 21 kobo, an increase of +80.95%
- Net Assets leapt by +3.87% to N137.370 billion from N132.256 billion.
SKYE BANK PLC 5 YEAR FINANCIAL SCORECARD.
| 2014(N) | 2013(N) | 2012(N) | 2011(N) | 2010(N) | |
| Share Capital | 6.609 B | 6.609 B | 6.609 B | 6.609 B | 6.609 B |
| Gross Earnings | 136.742 B | 127.340 B | 127.730 B | 102.362 B | 83.978 B |
| Profit Before Tax | 10.474 B | 17.136 B | 16.510 B | 2.842 B | 12.732 B |
| Taxation | (733 M) | (1.113 B) | (3.866 B) | (1.542 B) | (2.300 B) |
| Profit After Tax | 9.741 B | 16.023 B | 12.644 B | 1.300 B | 10.432 B |
| Loans & Advances | 651.261 B | 549.858 B | 540.380 B | 486.905 B | 405.636 B |
| Retained Earnings | 59.335 B | 48.396 B | 31.285 B | 25.145 B | 28.806 B |
| Dividend Per Share (K) | – | – | 0.50 K | – | 0.40 K |
| Net Assets | 132.256 B | 120.415 B | 106.894 B | 100.106 B | 111.853 B |
B= Billion; M=Million; N=Naira; K=Kobo.
Corporate Governance: The bank has a robust board comprising of 14 (Fourteen) members made up of 4(four) executive director, eight (8) non-executive directors and two (2) independent directors. Board Chairman is Mr. Olatunde Ayeni. Mr. Timothy Oguntayo is the Group Managing Director /CEO; and Mrs. Amaka Onwughalu is the Deputy MD. Other Directors are Mrs. Ibiye Ekong; Mr. Dotun Ayeni; Mr. Vinay Tuteja; Mr. Victor Adenigbade; Dr. Jason Fadeyi; Mr. Babajide Agbabiaka; Mr. Victor Odozi; Mr. Kunle Aluko; Mr. Abdul Bello and Mrs. Ammuna Lawan Ali.
Mr. Timothy Oguntayo; Group M/D & CEO
Mr. Timothy Oguntayo was appointed as the new managing director of the bank in April 15, 2014 after approving the retirement of Mr. Kehinde Durosinmi-Etti. Prior to this appointment, he was the Bank’s Executive Director responsible for the supervision of Corporate and Investment Banking Group, Commercial Banking in the South – West Region and all the international banking subsidiaries of the Bank. He has vast experience in financial advisory services and structuring of project finance across several sectors. He was part of the team that steered the successful merger of Prudent Bank with EIB Bank, Bond Bank, Reliance Bank and Cooperative Bank between 2005 and 2006 to form today’s Skye Bank PLC.
He was appointed to the Board of the Bank and its subsidiary companies in 2009. He was the pioneer MD/CEO of Skye Financial Services Limited (the investment banking arm of Skye Bank) before the Bank’s divestment from it in 2012. He equally served on the Board of Skye Stockbrokers Limited and Law Union & Rock Insurance Plc. He is currently a Director on the Board of Kakawa Discount House Limited.
He is a Fellow of the Chartered Institute of Bankers of Nigeria (CIBN) and an Associate of the Institute of Chartered Accountants of Nigeria. He is also an experienced banker with over three decades of continuous banking experience. He started his banking career in 1981 with United Bank for Africa Plc. Having acquired extensive experience in Commercial and Retail banking, he joined the then Prudent Merchant Bank, in 1990. Over the years, he has worked in various departments within the bank including Corporate Banking, Corporate Finance, Financial Advisory and Project Finance. He also has expertise in commercial banking and public sector funds management.
Mrs. Amaka Onwughalu, Deputy M/D.
Mrs. Amaka Onwughalu is the Deputy Managing Director of Skye Bank Plc. She was appointed to the Board of Skye Bank Plc. on November 30, 2008 as an Executive Director. She is an astute banking professional with over 27 years’ experience and expertise in Commercial Banking, Retail Banking, Treasury Management and Banking operations amongst others. She rose to the position of acting Managing Director of Reliance Bank in April 2005, before its merger with Skye Bank in 2006. Prior to her appointment as Deputy Managing Director of Skye Bank, she was overseeing the Treasury Group, International Funding Group and the South East Business Directorate.
Market Sensitivity/ Perception: The broker recommendation is to “BUY” Skye Bank Plc shares. The broker is impressed with the audited result, which revealed that revenue were ahead of market expectations. Growth in gross earnings is driven by loans and advances, cash and short term funds, property, plants and equipment, and intangible assets.
The broker also points out to would-be investors that the company controls a significant percentage of the market share (12%) and it is subject to more growth outlook in future. The broker believes in the Company’s ability to continue as a going concern and have no reason to believe it will not remain a going concern in the year ahead.
Future Outlook: the acquisition of Mainstreet Bank limited has increased the Group’s market share, with a stronger retail presence, greater efficiency and economies of scale as well as brands visibility as part of the synergy derived from the acquisition. The acquisition will also enlarge the Bank’s balance sheet and position it in an unassailable way to drive stronger growth in future which in turns enhances shareholders value and sustains it. The bank will continues to grow its business and market influence through the innovation of various products and services that are well adapted to the needs of its retail, commercial and corporate customers.
