UBA, IBTC-Chartered, Union Bank in Q3 decline

Category: Capital Market


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UBA, IBTC-Chartered, Union Bank in Q3 declineThe United Bank for Africa Plc (UBA) and IBTC-Chartered Bank have recorded decline in profit margin in their third quarter results for the financial year ended March 31, 2006. Union Bank Plc however posted a flat margin for the same period. Profit margin measures ability to turn earnings into profit. The case of UBA was most glaring as margin in the nine months ended December 31, 2005 declined to 11.89 per cent from 25.82 percent in 2004, representing a difference of 13.93 percentage points. IBTC-Chartered Bank also dropped by11.22 percentage points to 39.11per cent from 50.33 per cent in the same period the of the preceding year while Union Bank of Nigeria Plc remained fixed at 24.6 per cent. UBA recorded gross earnings of N44.59 billion in the review period with profit before tax (PBT) of N3.97 billion in the period. Profit after tax moved up by N80 million to N3.97billion during the period compared with N3.89 billion in 2004. Profit before tax moved up marginally by 2.3 per cent (N120million) to N5.30 billion in the review period. IBTC-Chartered moved from earnings of N4.53 billion in 2004 to N13.04 billion in 2005 while profit before tax in the same period jumped 124 per cent from N2.28 billion to N5.10 billion with no value added to profit margin. Oceanic Bank Plc was not left out in the drop as it could only turn N32.83 into profit out of each N100 income in the third quarter of the financial year ended September 30, 2005, compared with a margin of N36.59 in the corresponding period preceding year. The bank’s profit before tax increased by over N1.0 billion but this could not have a positive impact on profit margin. At N33.7billion, Union Bank’s earnings in 2005 were only N400 million better than N33.3billion recorded in the same period of 2004, showing that the bank could not attract more business probably due to the new level of competition in the banking industry. This brought net profit under a serious threat in the period having increased by mere N100 million, from N8.2 billion in the preceding year to N8.3 billion in 2005. The dismal performance of some of the key players notwithstanding, a few others recorded modest appreciation in profit margins. First Bank of Nigeria Plc, for instance, converted 29.97 per cent of its total earnings in the third quarter ended December 31, 2005 into profit. In the preceding year it converted 28.05 per cent of earnings into profit. Bank PHB also moved from 10.31 per cent in 2004 to 11.32 per cent in 2005, while Intercontinental Bank Plc as at November 30, 2005, increased its profit margin by 7.49kobo to stand at 23.56kobo compared with 16.07kobo or 16.07 per cent in 2004. Diamond Bank Plc and First City Monument Bank Plc (FCMB) also recorded appreciable growth at 21.3 per cent and 21.23 percent respectively, compared with 18.01 per cent and 14.66 per cent respectively in the preceding year.

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