Race to the Top


Following the release of their first half 2017 results by the Tier 1 banks, Obinna Chima examines their respective financial positions as they strive to post stellar results by the year end

Evidently, the first half results released by the Tier 1 banks showed that the financial institutions are in a race to ensure that they end the year with positive earnings, notwithstanding the lack of infrastructure, and general weakness in the macro-environment environment.

The performance by the banks also showed that they are better placed to pull through the challenges as well as other risks in the system.

The banks include Zenith Bank Plc, Guaranty Trust Bank (GTBank), FBN Holdings, Access Bank Plc and United Bank of Africa Plc.

A recent report by Renaissance Capital showed that the tier 1 banks have sufficient capital buffers and asset quality trends, which confirmed the widening gap between the Tier 1 and Tier 2 banks.

Indeed, the banks have benefitted from ‘flight to quality’ in terms of deposits over the years, just as the banks have continued to expand their retail banking operations.

Zenith Bank

For Zenith Bank, its audited half year results for the period ended June 30, 2017, showed that the bank is ahead of its peers with a profit after tax of N75.3 billion, as against the N35.5 billion it realised in the corresponding period of 2016.

Clearly, if not for the 30 per cent provision the bank made on its loan to 9Mobile (formerly Etisalat Nigeria), and some of its other customers, Zenith Bank’s would have reported higher profit in the period under review.

It is worthy of note that the network provider is currently undergoing restructuring to prepare it for new investor(s) and that the 9Mobile loan had not gone bad.

Also, the results showed that the bank recorded gross earnings of N380.4 billion, up by 77 per cent from N214.8 billion posted in the corresponding period of 2016. Its Net interest income stood at N138.962 billion, as against N127 billion in 2016.

Its financial position showed that Zenith Bank’s total assets climbed to N4.927 trillion in the period under review, from 4.739 trillion; just as its deposit from customers stood at N2.975 trillion in the period under review, from N2.984 trillion. Similarly, Zenith Bank recorded loans and advances of N2.187 trillion as at June 2017, from N2.289 trillion previously.

In terms of its key financial ratios, Zenith Bank’s net interest margin was 7.6 per cent as at June 2016, compared with the eight per cent it was in the comparable period of 2017, while its cost to income ratio was 57.1 per cent, its loans to deposit was 66.2 per cent. Its shareholders’ funds was N719 billion as at June 2017, up from N704 billion.

With total market capitalisation of N725 billion on the Nigerian Stock Exchange (NSE) as at last Friday, the bank’s share price has appreciated by 60 per cent year-to-date, from N14.40 per share as at January 3, 2017, to N23.08 per share last Friday.

Managing Director/CEO of Zenith Bank Plc, Mr. Peter Amangbo, had explained that the 30 per cent provision by the bank was prudent.

“Also, this was not done because the 9Mobile loan is a non-performing loan since the company is being restructured, but the general provisioning was done because we were being prudent and in order to recognise the deterioration of the macroeconomic environment brought on by the recession,” he said.

Amangbo said the bank relied on its pool of exceptional staff to make sound and timely decision and addressed issues in a manner that anticipated developments and demonstrated excellent understanding of the dynamics of the market and economy.



Guaranty Trust Bank Plc (GTBank) audited H1 results showed the bank’s gross earnings for the period grew by two per cent to N214.1 billion, from N209.9 billion in 2016. Its net interest income rose from N79.1billion to N129.5 billion.

GTBank ended the H1 of 2017 with profit after tax of N83.6 billion compared with N71.7 billion in 2016. The bank’s loan book dipped by six per cent from N1.590trillion recorded as at December 2016 to N1.491trillion in June 2017 while customer deposits decreased by one to N1.966 trillion from N1.986trillion in December 2016. Also, the bank closed the half year ended June 2017 with total assets and contingents of N3.75trillion and shareholders’ funds of N538 billion. GTBank’s Return on Equity (ROAE) and Return on Assets (ROAA) stood at 38.8 per cent and 6.4 per cent respectively.

The Managing Director/CEO of GTBank Plc, Mr. Segun Agbaje said the performance in the first half of 2017 reflected the strength of the bank’s businesses.

He said despite the challenging environment of slow economic growth, “we focused our resources on strengthening relationships with our customers, creating business platforms that seek to add value across all customer segments, whilst consolidating our leading position in all the economies in which we operate.”

The bank has continued to report the impressive financial ratios for a financial institution in the industry with a return on equity (ROE) of 38.8 per cent and a cost to income ratio of 40.2 per cent indicating the efficient management of the banks’ assets. Its other key ratios showed net interest margin of 10.42 per cent as at June 2017, compared with 8.40 per cent in the comparable period of 2016; CAR of 23.10 per cent , up from 18.25 per cent and Liquidity Ratio of 48.52 per cent.

GTBank’s share price on the NSE has appreciated by 60 per cent year-to-date, from N24 per share at the beginning of the year, to N38.54 per share at the beginning of the year.


FBN Holdings

On its part, FBN Holdings Plc recorded gross earnings of N289 billion in its half year ended June 30, 2017, up 7.8 per cent from the N267 billion in 2016.

The holding company’s net interest income rose by 30.2 per cent from N126 billion to N164 billion.

However, its profit after tax for the period under review was N29.5 billion, from the N35.9 billion recorded in the corresponding period of 2016. A further analysis of the results showed that total assets of N4.9 trillion grew by 3.0 per cent to hit N4.9 trillion, from N4.7 trillion as at December 31, 2016. Its deposit from customers was N3 trillion, as against the 3.104 trillion it realised previously. Also, FBN Holdings gave out total loans of N1.998 trillion as at the end of June. Its shareholders’ fund was N610 billion as at June, up from N583 billion.

In terms of performance on the NSE, FBN Holdings market capitalisation was N206.398 billion as at Friday, while its share price has appreciated by 69 per cent year-to-date, from N3.40 per share at the beginning of the year, to N5.75 per share as at last Friday.

In terms key ratios, its net-interest margin improved to 8.5 per cent in 2017, from 7.2 per cent in 2016. Liquidity ratio was 50.4 per cent; loan-to-deposit ratio at 74.5 per cent and cost to income ratio of 54.4 per cent.

Commenting on the results, the Group Managing Director, FBN Holdings, Mr. Urum Kalu said: “FBN Holdings has again demonstrated its strong revenue generating capacity in the current economic environment reporting gross earnings of N288.8 billion.

“In line with our strategic focus on improving asset quality; cost optimisation; and, enhancing revenue generation, we are beginning to see improvement across a number of metrics associated with these initiatives.”


Access Bank

Access Bank Plc recorded a profit after tax of N39.45 billion for the half year ended June 30, 2017, showing a growth of 17 per cent above the N33.67 billion in the corresponding period of 2016. Similarly, the bank had disclosed that it also made about 30 per cent provision on its loan to 9mobile. According to the audited H1 results released to the Nigerian Stock Exchange (NSE) gross earnings stood at N246.6 billion, up 42 per cent from N174.1 billion in the corresponding period of 2016. The growth in gross earnings was driven by 66 per cent increase in interest income. The results showed that Access Bank recorded total customer deposits of N1.9 trillion as at June this year, down from N2.089 trillion; while its loans and advances stood at N1.739 trillion; and total assets at N3.45 trillion. Its shareholders’ fund as at the period under review was N480 billion.

The bank’s capital adequacy ratio (CAR) remained strong at 21.6 per cent well above the regulatory minimum, while its net-interest margin was 16 per cent.

In terms of share performance on the NSE, Access Bank’s price has appreciated by 67 per cent year-to-date, from N5.81 per share at the beginning of the year, to N9.70 per share.

Commenting on the results, Group Managing Director/CEO, Access Bank, Herbert Wigwe said the bank’s performance in the H1 reflects the “strength and sustainability of our business as well as the effective execution of our strategy.”

He added that the bank’s retail expansion drive led to investments in its channels, distribution network, and service quality and brand enhancement.


United Bank of Africa

The United Bank for Africa’s (UBA) audited half year financial results ended June 30, 2017, showed that the bank grew its gross earnings for the period by 34.5 per cent to N223 billion, as against N166 billion reported in June 2016. This was driven by the 44.3 per cent and 16.0 per cent growth in interest income and non-funded income respectively.

The UBA Group recorded profit after tax of N42.3 billion, translating to a 56.2 per cent growth over the N27.1 billion recorded in the half-year of 2016. While the Group closed the half year with total assets of N3.69 trillion, a growth of 5.3 per cent, it prudently grew gross loans to N1.6 trillion, a 4 per cent growth when compared to its loan book as at 31 December 2016. Its deposit from customers also stood at N2.449 trillion.

The Group’s shareholders’ fund grew to N483.1 billion, whilst it delivered an annualised 18.2 per cent return on average equity.

UBA’s share price has appreciated significantly by 99 per cent year-to-date, from N4.45 per share at the beginning of the year, to N8.81 per share as of last Friday.