… as banks restrategise for post-Covid-19 operations
. Tougher times ahead for financial institutions – Analysts
As the ravaging COVID-19 pandemic cripples the business sector across the world, four Nigerian Deposit Money Banks have recorded a total of N211.961billion in net interest income in the first quarter of this year, which ended on April 23, The Point reports.
This is against the N182.886billion, which these banks pulled together in the review period of 2019.
The banks are Access Bank Plc, GTBank Plc, United Bank for Africa Plc and Fidelity Bank Plc.
Analysis of the banks’ results showed that Access Bank recorded N63.630billion net interest income after impairment loss on financial assets in the first quarter of 2020, against the N53.463billion, which was reported in the 2019 review period, representing a 19 per cent increase.
GTBank followed with N63.059billion in the first quarter of 2020, up from the N57.566billion recorded in the comparable period of 2019.
Others are United Bank for Africa, which reported N62.775billion net interest income after impairment loss on financial assets in 2020, against N56.361billion in 2019, representing a percentage increase of 11.39. Fidelity Bank followed with N22.497billion net interest income after impairment loss on financial assets, against N15.496billion in 2019, representing an increase of 45.18 per cent.
Market pundits, however, told The Point that the COVID-19 pandemic, which resulted in the over one month total lockdown, would eventually affect the performance of companies in the second quarter, adding that the general performance of the financial institutions was not impressive.
A financial analyst, Mr. Ubong Ekanem, said there was a great danger that the economy would further slump, going by the widespread effects of the pandemic, especially as there was no specific treatment for COVID-19 yet.
“Companies will not grow in isolation; they need both the foreign and local investors to affect their growth performance,” he said.
He noted that although some of the banks made marginal increase in some areas, it was generally not a good outing because they would have done better if not for the COVID-19 pandemic, which had brought the entire world to an unprecedented standstill.
Managing Director/Chief Executive Officer, Heritage Asset Management Company, Mr. Ademola Gbadamosi, said the world was a global village and that as long as the local economies had been affected by the pandemic, virtually every aspect of economic growth would be crippled.
He added that before the COVID-19 pandemic, companies had been grappling with policy inconsistencies, coupled with the contraction in yield from Federal Government’s debt instruments, which affected the banks’ income.
Managing Director/Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said a lot of the profit the banks made in the first quarter of last year was from investment in government securities, when they were enjoying a yield of close to 22 per cent.
“If you compare that to this year’s, you will observe that the rates have dropped drastically; we are looking at Treasury Bill (364 days TB) at nine to 11 per cent, when at the same time last year, it was about 17 per cent,” he said.
He noted that the marginal performance could also be traceable to ineffective risk management practice in some of the banks, especially those that financed elections of politicians.
“Investors need to pay serious attention to facts beyond the figures presented and adopt a more cautious approach to trading in the shares of the financial institutions as it appears that the firms had not disclosed how bad their books were, and how they hoped to address same and its implication on their capital base,” he added.
But while reacting to the result, the Group Managing Director/CEO of UBA Plc, Mr. Kennedy Uzoka, expressed satisfaction with the bank’s performance in the first quarter of 2020, inspite of the challenging business environment.
He said, “We are pleased with our top and bottom lines in the first quarter of 2020, delivering N147.2 billion in gross earnings and profit before tax of N32.7 billion.
“The double-digit growth in the topline testifies to the resilience of our business model as a group, even as the 17per cent growth in our fees and commission income underscores our diversified business model, enabling us to deliver best value to our stakeholders, even in tough macro-economic scenarios. “I am very excited about recent successes we have recorded in all our business segments, especially our retail and electronic banking businesses within the period, with retail deposits accounting for 72 per cent of customer deposits even as cost-of-funds moderates to 3.3 per cent.
“We will continue to grow market share in all our markets, while maintaining cost discipline across our businesses, driving efficiency in our processes using best-rated technology.”
Managing Director/ Chief Executive Officer, Access Bank, Mr. Herbert Wigwe, while addressing the investing public at the bank’s Annual General Meeting by proxy, assured shareholders that despite the pandemic, Access Bank had delivered an impressive performance in its just released first quarter result.
He also noted that the bank was well prepared for the crisis, having put in place effective measures to ensure that its operations continued smoothly.
Wigwe underlined the fact that the bank’s exposure to the oil and gas sector was well within prudential guidelines