Banks Adopt Austere Measures To Maintain Profitability

Banks, it appears have adopted the old saying that, “if the bird will fly without perching, then the hunter will aim to shoot without missing”. Most of the banks managed to grow gross earnings during the first half of this year, yet where able to retain sizeable profits by lower impairment cost.
A case study of some of the three top banks in the country, shows a very clever management of scarce resources to give shareholders value for their investment.
For instance, First Bank of Nigeria Plc managed to grow its gross earning by a slim one per cent to N293 billion, even as its interest income fell by three per cent to 225 billion. But the oldest bank in Nigeria was still able to grow its profit before tax nine per cent to N39 billion by reducing its impairment cost by 15 per cent or N53 billion.
But the ‘wonder boys’, some years ago the new kids on the block did much more to grow their profits.
For instance, GTBank Plc grew its gross earnings six per cent to N227 billion, but had its interest income come down by two per cent to N162 billion. But by reducing its impairment cost by 72 per cent or N2 billion, was able to post a pre-tax profit of N110 billion, an eight per cent rise during the period.
Another ‘wonder boy’, Zenith Bank Plc, saw its gross earnings fall by 15 per cent to N322 billion, and a further reduction in its interest income by 13 per cent to N229 billion. It however came out strong with a 16 per cent increase in profit before tax of N107 billion, after reducing impairment cost by 77 per cent or N10 billion.
The three ‘mega’ banks still managed to increased dividend yield by 2.59 per cent (FBN); 6.96 per cent (GTB) and 11.73 per cent (Zenith Bank) respectively.

Leave a Reply

Your email address will not be published. Required fields are marked *