As the dust settles on the financial crisis which brought banks to their knees, the banks appear to be emerging stronger from the debris of huge non-performing loans (NPLs), as they post impressive financial results with some of them actually paying dividend and giving out bonus shares to existing shareholders.

Based on the release of financials by the banks, the stock market reacted yesterday, gaining 1.75 percent. The All Share Index closed at 24,555 points. Specifically, GTBank was the highest gainer in the banking sub-sector adding 0.95 kobo to close at N19.95 kobo. Access Bank also rose to N8.99 kobo after gaining 0.42 kobo. Zenith Bank gained 0.73 kobo to close at N15.43 kobo.



Beating analysts’ expectations, the three banks that released their full year financial results for the uniform period ended December 2010 all recorded impressive pre-tax profits, ranging from 42 percent to 564.46 percent.

Although earnings dropped in all three banks, Zenith Bank recorded a 42 percent increase in its profit before tax from N35.9 billion in 2009 to N50.03 billion in 2010. GTBank’s earnings rose by 73.28 percent from N27.96 billion in 2009 to N48.46 billion in 2010, and Access Bank’s went up by 564.46 percent from a loss of N3.48 billion in 2009 to a profit before tax of N16.17 billion in 2010.

The banks recorded impressive growth in their pre-tax profits, even as growth in loans and advances, one of the core businesses of banks, was marginal. Loans and advances by Zenith Bank only grew by 2.14 percent from N698.33 billion in 2009 to N713.29 billion in 2010. GTBank’s loan portfolio went up by 5.34 percent from N563.49 billion in 2009 to N593.56 billion in 2010, while that of Access Bank went up by 11.99 percent from N383.78 billion in 2009 to N429.78 billion in 2010.

Wale Abe, chief executive officer of the Financial Market Dealers Association of Nigeria (FMDA) who spoke with BusinessDay in a telephone interview, said what is happening sign-posts better things to come. According to him, when the financial institutions are strong, it is good for the economy because banks, anywhere in the world, are the drivers of the economy.

Concerning the fall in the banks’ gross earnings, Abe said earnings have reduced because the volume of business banks do has reduced. He further went on to explain that the volume of business has fallen because the level of inefficiency has also reduced drastically because all loopholes have been blocked.

Bolaji Balogun, managing director of Chapel Hill , simply said it’s a “stellar performance”. Victor Ndukauba, an analyst with Afrinvest who spoke with BusinessDay, said: “The spike in both pre-and post-tax earnings (which were 10.0 percent below and 1.0 percent above our forecasts, respectively) was pretty much in line with their expectations”.

Ndukuaba said Access Bank has been able to achieve decent growth in gross earnings (6.0 percent below our 2010 full year forecasts) based on its singular drive to sustain a circa 10.0 percent growth in credit, albeit with enhanced focus on only top-notch borrowers and, by extension, asset quality. This was pretty much against the run of play, given the general decline in risk asset creation by Nigerian banks in 2010.
Adesoji Solanke, an analyst with RenCap Group, said he sees the logic in Nigerian banks finalising their balance sheet cleansing in the aftermath of the crisis, with the full financial year 2010 results, as this would place the banks on a clean pedestal going into 2011, and effectively put paid to the days of provisioning surprises.

Abiola Rasaq, an analyst with Vetiva Capital Management Limited, said that these banks’ financials are good numbers; adding that the market will continue to react positively to these results.

Access Bank is the only bank among the three that witnessed growth in gross earnings. Its earnings went up 7.25 percent from N84.98 billion in 2009 to N91.14 billion in 2010, while Zenith Bank’s earnings fell 30.58 percent from N277.3 billion in 2009 to N192.49 billion in 2010, and GTBank’s earnings fell 5.32 percent from N162.55 billion in 2009 to N153.91 billion in 2010.

Zenith Bank is proposing a dividend of 85 kobo per share, while GTBank is paying a dividend of 75 kobo per share and a bonus of one share for every four shares held by shareholders of the bank. Access Bank is paying 30 kobo per share to its shareholders.

In spite of the peculiar environment in which the banks operated during the period under review, all three banks witnessed growth in deposits.


Culled from businessdayonline, wednesday Marh 22, 2011 edition

Why the vs.?

And why is it on the front page?

'Vs' is just to make it sensational so people will read. That's journalistic style.
It works!!!

This is a no brainer

moving on!

the information on this thread is beyond the comprehension of many on this forum however, i would wish to know what the results for FBN and UBA looks like to know where am putting my money though i think access bank will give good returns if one can hold for an upward of three years.

Investors wait till after the elections before jumping into mkt

Impressive results. The banking sector is out of the woods.

Negligence is the numba one thing killing us in this country, can u imagine, someone posted the latest news concerning the financial market of your county and all you can say is, moving on or why is it on d front page. Yet u claim to be educated, most of u av a stake in the market and ur not concerned, same way ur not concerned about the fall of your nation. I am really disappointed. Nice trend, not everyone shall understand.

Investors wait till after the elections before jumping into mkt

This is the right time to buy, due to the political unrest, by nxt week, there might be a panic, which forces people to sell, and d market to plummet. But this is just my assumption.

I think this should be moved to the Money Section. Moving now.

dotman:

Investors wait till after the elections before jumping into mkt

This is the right time to buy, due to the political unrest, by nxt week, there might be a panic, which forces people to sell, and d market to plummet. But this is just my assumption.

i rather stay beside the lines till the first week after the polls,what if you jump in now and panic pushes the price in the wrong direction and thereafter elections results brought uncertainty and prices goes further down,what do u do ,blame your stockbroker ? or spank yourself.

aguiyi:

i rather stay beside the lines till the first week after the polls,what if you jump in now and panic pushes the price in the wrong direction and thereafter elections results brought uncertainty and prices goes further down,what do u do ,blame your stockbroker ? or spank yourself.

Well the market cannot remain down for long, except ur a short time investor or a really active one, buy and hold is still a good option, buy now, sell later, and since the shares are doing better than anticipated now, dey wld adjust in the future back to there original position. This is just a risk factor (political risk) in the stock market.

Bros forget what the auditor expressed as an opinion ,you will agree with me that some of this reports are doctored. just trade what you see and not what the books say.

i will look at the report again and get at to you (at least let me see the improvement on their assets)

dotman:

Negligence is the numba one thing killing us in this country, can u imagine, someone posted the latest news concerning the financial market of your county and all you can say is, moving on or why is it on d front page. Yet u claim to be educated, most of u av a stake in the market and your not concerned, same way your not concerned about the fall of your nation. I am really disappointed. Nice trend, not everyone shall understand.

That is one of the reasons why some are poor and others rich, some are only interested in the news about celebrities therefore putting more money in the pocket of such celebrities and potentially pauperising themselves in the future, some are interested in financial news to learn the latest emerging opportunities and may become the moneybags of tomorrow. Some are also able to maintain a healthy balance between the two.

i guess you should check cashcraft.com for the results as what am seeing seems good but access bank experienced a decline in its key indicators as against zenith and Gtb,

Yup, Access bank's Fixed assets took a massive nosedive, would be interested in someone explaining why that happened.

not just fixed assets, net current asset also dropped along side pre tax, post tax and dividend.
The only increment i can see is a massive hike in the value of their long term debt. i wonder who this journalist is trying to lure

Someone explained it thus, that they sold off some fixed assets to generate money which they then lent out. That would agree with this statement in the post:

[Quote]
Ndukuaba said Access Bank has been able to achieve decent growth in gross earnings (6.0 percent below our 2010 full year forecasts) based on its singular drive to sustain a circa 10.0 percent growth in credit, albeit with enhanced focus on only top-notch borrowers and, by extension, asset quality. This was pretty much against the run of play, given the general decline in risk asset creation by Nigerian banks in 2010.[/quote]

The results would suggest that they went against the prevailing general banking industry sentiment, a bold move to swim against the tide I must say. They did increase their gross earnings while the others had reduced gross earnings. It is a risky venture though but then you can't make money without risk anyway. If those credits they gave out become none performing then some major schit will hit the fan like happened generally in the sector in 2008 but if they keep performing, then they've turned some dormant fixed assets to money to generate even more money for their shareholders.

they also could not tell the number of staffs they had in the year under review due to massive lay offs.

Anyways,what matters most in my view is what investor take home at the end of the day and it also dropped

Chai, GTBank N19; Access Bank N9; Zenith Bank N15

When will i break even for Xt's sake eh?

Demdem:

Chai, GTBank N19; Access Bank N9; Zenith Bank N15

When will i break even for Xt's sake eh?

When the going gets tough the tough get going
tarry awhile and things will get better, the market is bloody at present and anyone who is selling now is likely making a loss.

duduspace:

When the going gets tough the tough get going
tarry awhile and things will get better, the market is bloody at present and anyone who is selling now is likely making a loss.

My bro, i hear u. na jeje i dey when those useless sellers came to me ooo. If i had known, i would have followeb my inner mind. God is still on the throne.

Demdem:

Chai, GTBank N19; Access Bank N9; Zenith Bank N15

When will i break even for Xt's sake eh?

Bros jst relax with time u'll break even and even surpass ur investment. The fact that there is blood on the street now doesn't mean it wouldn't get better jst be calm.

I am not impressed by these statistics!
Who would not make profit paying less than 3% on deposit and lending at over 21%.
CBN needs to do something about the margin.

i would love to see access bank financial statement cos the growth n profit should be from extraordinary activity or some sort of change either n Accouting standards

Excellent7:

I am not impressed by these statistics!
Who would not make profit paying less than 3% on deposit and lending at over 21%.
CBN needs to do something about the margin.

Tell them. It's criminal!

But we're Nigerians after all said & done, and what we do best is rip one another off

l will need clarification on this reports,l hope the auditors are nt trying to cajole us 2 invest in these banks
1st they claimed EARNINGS dropped in all d banks,yet there was INCREASE in PBT.can they please throw light on this or could it be there was massive reduction on expenses?if yes pls wht are these expenses.
2)there was reduce activities in their core bizness,so where is these massive profit coming from?repackage existing loan on unexplainable int rate?roundtripping?reduction in staff salary/personnel

Please somebody should help me out cos am a little bit confused.

am quit sure you dont need help cos you have sumed it up. . just go to cashcraft.com and see the report for yourself

l will need clarification on this reports,l hope the auditors are nt trying to cajole us 2 invest in these banks
1st they claimed EARNINGS dropped in all d banks,yet there was INCREASE in PBT.can they please throw light on this or could it be there was massive reduction on expenses?if yes pls wht are these expenses.
2)there was reduce activities in their core bizness,so where is these massive profit coming from?repackage existing loan on unexplainable int rate?roundtripping?reduction in staff salary/personnel

Please somebody should help me out cos am a little bit confused

i mite bite on the GTB figures, other than that, i dont believe sh*t

there are ways a bank can boost up its PBT(earnings), as uve said, but in nigeria, the bulk of their profits are from round tripping,
as for GTB, u could say that their exposure was limited to both the global crisis and sanusi tsunami, so hence their continued rendering of encouraging dividends,

i cant vouch for others,

Happy times are here again,based on the advice of my broker I invested in the market early part of this year. Intend to hold for a long long time before selling. Some i will offload as soon as it reaches my mark up point. Meanwhile, yesterday was the best time to invest in the stock market. The good times are here again, no political uncertainty can hinder the upward swing.

Let me offer an elementary explanation to some nairalanders. There was a massive drop in interest income during this period due to regulations and since this singular factor accounts for bulk of bank's earnings, that accounts for drop in earnings. Its ony the bank that largely increased its risk assets or had an extraordinary income that will witness increase in earnings. As for expenses, last year witnessed enormous provisioning as imposed by regulations, the same was less this year as only provisioning as outlined in the prudential guidelines was applied. As for the post on retrenchment, there was nothing like that in Zenith and GT Bank last year, quote me anywhere. Zenith is currenly operating with over 315branches while GT bank has about 200branches. Since most of these branches are newly established they needed time to come out of the woods and definitely will start contributing to the group this 2011. I believe, for some of us that are not in the know, that these results were subjected to serious scrutiny by both NASB, CBN, NDIC and the respective auditors before they were released. Its back to good times in the industry. You can catch the rest at cashcraft.com for people that cares