Economy crisis: Seven banks report N39.6bn drop in profit

As the scourge of economic recession continues to bite harder in nigeria, seven of the listed banks which recently submitted their third quarter unaudited results and accounts on the Nigerian Stock Exchangeunts recorded huge declining in profit.

The likes of Diamond Bank Plc; Unity Bank Plc; Sterling Bank Plc and First Bank of Nigeria Holdings Plc (FBN) announced N39.6 billion drop in profit after tax in third quarter ended September 30, 2016.

Data gathered by Business247 News Online, show that Ecobank, Wema Bank and  Fidelity Bank also declared decline in period for the review period.

These seven banks reported a profit of N156 billion in Q3 2015 as against N116.5 billion recorded in Q3 2016; representing a decline of 25.4 per cent or N39.6 billion drop in profit.

The breakdown shows that Diamond Bank recorded the highest decline as its profit dropped by 78 per cent or N12.5 billion from N15.97 billion in Q3 2015 to N3.5 billion in Q3 2016.

The Group Managing Director of Diamond Bank Plc, Uzoma Dozie, said, “We believe the macro conditions and other external factors will remain challenging for the rest of the year and well into 2017.

“However, by pursuing our technology-led retail strategy and with our focus on innovation and scalability, we believe the Bank is well-placed to benefit in the medium to long term from the favourable fundamentals in Nigeria, namely a large population, many of which remain unbanked. This strategy stands to benefit all stakeholders, including our shareholders and customers in the long run.”

Closely followed is Unity Bank Plc that declares 63.2 per cent or N5.8 billion drop in profit from N9.3 billion in Q3 2015 to N3.4 billion in Q3 2016.

Sterling Bank Plc and Fidelity Bank Plc announced 27 per cent and 24 per cent decline in profit from N7.5 billion and N11.4 billion to N5.5 billion and N8.75 billion in Q3 2016.

First Bank of Nigeria Holdings Plc’s profit dip by 15.3 per cent or N7.7 billion to N42.5 billion in Q3 2016 from N50.2 billion in Q3 2015 while Ecobank Transnational Incorporated (ETI) profit dropped by 14.5 per cent or N8.8 billion to N51.6 billion from N60.4billion recorded in Q3 2015.

The lowest drop in profit among the seven banks was Wema Bank Plc. The bank profit fell by 2.3 per cent or N30 million in profit from N1.29 billion in Q3 2015 to N1.27 billion in Q3 2016.

Chief Executive Officer, Wema Bank Plc, Segun Oloketuyi, said domestic environment remained largely strained, as the country’s August 2016 manufacturing and non- manufacturing PMI data continued to show underperformance(s) at 42.1 index points and 43.7 index points respectively. Inflation maintained an upward trend from 17.6 per cent (August 2016) to 17.9 per cent (September 2016), though at a slower pace (May – September 2016), as rising interest rate and foreign exchange illiquidity continue to impact prices.

He added: “Going into the final quarter of the year, we do not envisage any material improvement in the operating environment. Rather, we expect the gains of the fiscal and monetary policies to impact between Q1 & Q2’ 2017.

“However, we believe we would close the year with improved performance. On the capital front, we are pleased to announce that we just concluded a Tier II capital raise of N20 billion. This will boost our Capital Adequacy Ratio (CAR), currently at 13.36 per cent (pre-capital raise) and supporting our medium term growth plan.”

Based on the regulatory headwinds that characterized the industry in the last nine months, and the catalogue of macroeconomic challenges rocking the economy, analysts had predicted dreary results in the industry in the current financial year.