Nigeria Content Online

Finance experts
have praised the fact that banks’ books are improving by the quarter,
although they expressed concern with the efficiency ratios especially
the cost-to-income ratio.

Some banks recently
released their half year results, with highlights on loan growth
reflected on decision to preserve capital, retail and corporate banking
loan growth resilience, funding costs significantly lower, improvement
in their profit levels and asset quality, among others.

Sterling Bank’s
profit before tax for the half year rose to N4.2 billion from a loss of
N6.9 billion in June 2009 while UBA’s gross earnings fell to N93.7
billion in the corresponding period from the N109 billion for 2009.

Yemisi Edun, the
chief financial officer, FCMB, said in a statement that the bank hopes
to leverage on its efficiency levels for better profitability.

“The group showed
improvement in its performance quarter -on -quarter. This was largely
driven by recovery in our net interest margins and growing momentum in
non- interest income.” Devendra Puri, an executive director with
Sterling Bank said the second half of the year should reinforce the
trend seen in the first six months.

“Internally, we
will remain focused on efficiency and keeping our cost-income match
within an acceptable range. Our results show that the structural
improvements we introduced in the bank last year are bearing desired
results. Externally, we expect to see growth in net loans and advances
as well as a lifting of the pressure on interest margins driven by
events in the wider economy with a payoff on earnings and shareholder
returns. By and large, we are confident that Sterling Bank will
continue to consolidate on the gains of the first half of the year.”

Solid results

“In summary, we
believe that these were a solid set of results with the bottom-line
coming in ahead of expectations” said Kato Mukuru, Director, Head of
African Research, Renaissance Capital, an investment bank. Mr. Mukuru
added that the passage into law of the Asset Management Company (AMC)
bill should assist in freeing up some capital for banks to grow.

Some analysts say
during the 2010 half year period under review, that the low interest
rate regime had a negative impact on the appeal of the money market and
deposit-taking but that in the same time, a slight improvement in
macroeconomic indices showed evidence of a return of confidence among
businesses and consumers.

They however say
financial institutions were mostly cautious on credit expansion with a
deliberate containment of exposure to the capital markets, energy
products trading and real estate sectors as well as lower and mid-tier
business borrowers.

“We are however
optimistic that Second half, 2010 will give rise to better performance
as we expect recoveries in the economy to positively impact the banking
sector” an analysts at Afrinvest, a finance advisory firm said.