Uncertainties in the nation’s economy have continued to weaken listed banks’ profit; with three of the 22 banks in the country losing N10 billion in their unaudited first quarter s and accounts for the period ended March 30, 2016.
Slow gross earnings, naira volatility and other economic challenges have made Ecobank International Incorporated (ETI), Zenith Bank Plc and Guaranty Trust Bank Plc (GTBank), to post a combined N68.39 billion in Q1 2016 as against N78.7 billion recorded in Q1 2015.
This represents a N10 billion or 13.1 per cent decline recorded by the banks. ETI suffered the highest decline in profit, when it dropped by nearly 34 per cent from N24.5 billion in Q1 2015 to N16.2billion in Q1’2016, followed by Zenith bank that recorded four per cent decline in profit from N27.68 billion to N26.57 billion in the first quarter under review.
Group Chief Executive Officer, ETI, Mr. Ade Ayeyemi said: “Our result for the first quarter was a reasonable performance in light of the very difficult and tough operating market conditions.” Loans and advances to customers “despite the challenges our clients continue to face, our diversified business model, which is a source of competitive strength and stability, allows us to continue to serve them in and across regions in Middle Africa. With our revised strategy and a simplified operating model we aim to be more efficient in running our businesses and serving our customers. ”
“Cost discipline remains a priority, especially in this revenue challenged environment. Despite a slight deterioration in our cost-income ratio to 66.1per cent, we remain focused on reducing cost, while simultaneously investing in people, processes and systems, for the future. ”
He added that, “We remain vigilant as we continue to navigate the company through this challenging period. We are confident in our strategic plan aimed at ensuring we generate sustainable long-term performance.”
Furthermore, GTBank profit for the period moved to N25.6 billion, 3.8 per cent below N26.56 billion posted in Q1 2015.
Commenting on the Q1 2016 financial results, the Managing Director and Chief Executive Officer of GTBank , Mr. Segun Agbaje, stated that “Despite a slow start in economic activity in 2016 and the extremely challenging business environment, the Bank recorded decent performance across key financial indices during the period.”. He added that “We understand that there’s a lot more work to be done, we are however prepared for the challenges and opportunities that lie ahead the 2016 financial year”.
The fall in profit can attributed to high impairment charges on bad loans, foreign exchange volatility and other challenges facing the economy following the significant drop in the nation’s oil revenue due to the sharp fall in oil prices.
Out of the 15 banks quoted on the Nigerian Stock Exchange, five have released unaudited financial statements for the period under review.
Union Bank of Nigeria Plc and United Bank for Africa Plc (UBA) announced impressive growth in profit as both banks were prudent in managing interest expenses.
UBN profit for Q1 2016 rose by 96.3 per cent to N4.7 billion from N2.4 billion while UBA profit also inched up by 0.2 per cent from N16.96 billion to N19.99 billion recorded in 2016.
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