.key financial metrics of lenders may crumble further—Analysts
Ngozi Amuche
Despite global economic depression following the corona-virus pandemic, five commercial banks in the country have recorded N26.481trillion marginal increase in total assets in the half (H1) year of 2020.
This was against the N21.699trillion which the banks reported in the review period of 2019.
While some of those banks grew their bottom-line, others did not as profit dropped sharply compared with the position in the corresponding period of 2019.
The banks are First Bank of Nigeria Plc, Zenith Bank Plc, United Bank for Africa Plc, Stanbic IBTC Plc, and FCMB Plc, respectively.
A detailed analysis of the bank’s financial results, which was presented to the investing public through the Nigerian Stock Exchange revealed that Zenith Bank Plc led the pack of others with 19.45percent marginal increase in total assets, to N7. 580trillion in the half year of 2020, compared with N6. 346trillion, which the bank declared at the same time last year.
First Bank followed with 14percent increase in total assets to N7.130trillion in the half year ended July 2020, against N6. 203trillion, which the bank posted at the review period of 2019.
United Bank Plc reported N6. 775trillion marginal increase in total asset in the half year of 2020, from N5. 604trillion which the bank posted at the same time last year, a percentage of 20.90percent.
Stanbic IBTC recorded 61.60percent increase in total asset to N3. 022trillion in the half year of 2020 from N1. 876trillion at the period under review, while FCMB Plc reported 18.30percent increase in marginal asset to N21.699trillion in the half year of 2020, compared with N1. 973trillion in 2019 financial year.
BANK CEOs’ PERSPECTIVE
Commenting on the H1 results, market pundits and other stakeholders said, given the challenges of the operating environment amid pandemic crisis, the uncertainties in the year; the banks would have done better than mere marginal increase, which means very insignificant growth.
Group Managing Director/CEO of UBA, Mr. Kennedy Uzoka, said, “Our H1 2020 result is yet another demonstration of the resilience of our business model in an extremely uncertain and tough operating environment. We recorded commendable growth in our underlying business in terms of customer acquisition, transaction volumes and balance sheet whilst inflation, depressed yield environment and exchange rate volatilities impacted our net earnings as anticipated.”
Uzoka added that despite the short-term challenges to various economic sectors occasioned by the COVID-19 pandemic, “the bank is focused on the fundamentals of businesses in growth-driving sectors of various economies, in which we operate.”
He, however, expressed confidence in the bank’s capacity to deliver good returns on investment to shareholders at the end of the 2020 financial year.
On his part, the Managing Director/CEO First Bank of Nigeria Plc, Dr. Adesola Kazeem Adeduntan, said, “These are undoubtedly tough and trying times for people, businesses and economies the world over. Our financial performance in the first half of the year reflects the quality of our past decisions, which have broadened our earnings and strategically positioned us to thrive thus far, through the current global health and economic crises.
“Underpinning this financial performance is our commitment to being there for our customers and the communities we serve, and over the past six months we have lent the full weight of our franchise to safeguarding lives and livelihoods of our staff and customers by leading from the front in the fight to curtail the COVID-19 outbreak and offering grace periods on loans to our small business customers.
ANANLYSTS POINT ACCUSING FINGER
Pointing accusing finger on the marginal increase in the performance of the financial institutions, a Professor of Economics, Johnson Korede, said a combination of several factors has actually been affecting the Nigerian economy, especially companies that are staggering to survive.
Korede said the reason behind the bank’s weak performance of marginal increase; virtually in all key financial aspects is because the economy was already bleeding, even before the advent of the Covid-19 pandemic, adding that the country’s annual GDP grew sluggishly by 1.8percent on weak non-Oil sector performance, which equally affected not only the banking sector but all other economic indices.
“Apart from that, the commercial banks play the role of intermediary between borrowers and lenders in the economy; that means, it is only when the banks are doing fine that the economy will grow. So, it is not surprising that the banks could not perform more than they did in the six months of 2020,” he said.
Director General of Lagos State Commerce and Industry, Dr. Muda Yusuf, said Nigerian manufacturers are also feeling the heat of the pandemic crisis as access to critical raw materials needed to sustain their operations has been impacted.
According to him, the performance of key sectors that have the capacity to facilitate economic diversification is largely constrained.
He said, “The global supply chain has been deeply disrupted as China, which is the second largest economy in the world, is a major supplier of inputs for manufacturing companies around the world.
“Overall, despite the headwinds and the fact that 2020 presented a tough operating environment for the industry, we remain optimistic on the fundamentals underpinning our long-term retail-led business strategy.”