Nigeria: Waiting for the storm to blow over

Earnings take a hit
Tough regulatory policies, like the increased AMCON and NDIC levies and the hike in the Cash Reserve Ratio from 12% to 75% in less than two years, have hurt bank earnings drastically. Second quarter results of most lenders released between July and August showed declined earnings, which could continue in the third quarter.

For instance, the half-year ended 30th June result of Skye Bank indicated that its profit before tax (PBT) dropped to $44.71m as against $64.92m during the corresponding period in 2013. Profit after tax (PAT) also decreased to $35.6m as against $51.8m the previous year.

For Fidelity Bank Plc, the PBT dropped by 16% from $69.29m to $58.08m. Total customer deposits also declined by 5% to $4.71bn.

GTBank recorded a 6.92% drop in PBT to $320.89m, compared with $350.29m last year June, while PAT stood at $271.08m, lower than $301.87m in June 2013.

Although UBA Plc had an 8.7% increase in gross earnings from $783.8m in 2013 to $851.98m this year, its PBT dropped by 13.1% to $177.94m, compared with $204.8m in 2013.

FirstBank of Nigeria’s result showed that PBT dropped by 12% to $297.1m against $337.6m recorded in same period of last year. Likewise, PAT declined by 19.4% to $229.01m from $283.95m in 2013.

Analysts said that the policy change will benefit bigger banks more because they have more ATMs. The industry is also likely to see customer drift, away from mid-player banks with fewer ATMs.