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Some
banks are optimistic on returning to profit before the end of the year,
after the remarkable losses declared by almost all the banks in the
December 2009 mandatory common year end.

Bank PHB, one of
the banks affected by the Central Bank’s special audit has said it
expects to return to profitability before the end of the year. In a
filing to the Nigerian Stock Exchange on Monday, Bank PHB, said it
expects to return to profitability in the third quarter this year with
a pre tax profit forecast of N11.2 billion. The bank forecasts gross
earnings of 15.7 billion naira for the period. Comparisons were not
available because the bank, one of the first of the rescued
institutions to give a timeline for a return to profitability, has
changed its accounting year to the calendar year.

More business focus

A senior official
of the bank who requested not to be named said to achieve this, the
bank has essentially retooled its mode of operations. “Basically, we
have essentially retooled our operations,” he said. “We are now more
business focused especially expanding our international trade and
retail banking businesses. We are also engaging in aggressive loan
recovery strategies and expect to write back some of the previous
provisions earlier made in 2009. We have also largely held down
operating expenses to a sustainable level in line with current
earnings.”

Most bank CEO’s
said during their annual general meetings held in the first quarter of
the year that after a difficult year in 2009, attention has now been
turned to increasing efficiency and enhancing profitability. Some
finance experts are of the view that a lot of the concern in the
banking sector have been captured and brought into perspective during
the CBN/NDIC audit in September 2009. In this view, they say outlook is
fundamentally positive as real GDP growth in Nigeria is expected to
accelerate in 2010 adding that the expansionary budget has been
approved and the Asset Management Company bill has been passed while
oil is still trading at an average of $80 to the barrel.

Renaissance Capital, an international finance advisory and research firm says banks’ 2010 profit forecasts are well supported.

“We expect concerted effort towards loan recovery in 2010 by the
banks and we expect that the 2010 profit forecasts are well supported,
as we forecast robust loan and deposit growth, a wider net margin, an
improved efficiency, lower loan loss provisions and a lower tax rate of
20 per cent.