Financial Review for the First Quarter
Ended 31 March 2018
Gross Earnings rose 19% to ₦137.5bn in Q1 2018, (Q1 2017: ₦116.0bn), with interest and non-interest income contributing 70% and 30% respectively. Interest Income grew by 20% y/y to ₦95.6bn in Q1 2018 from ₦79.3bn in Q1 2017. Non-Interest Income of ₦41.8bn (+15% y/y) in Q1 2018 from ₦36.5bn in Q1 2017. Profit before Tax (PBT) for the period of ₦27.4bn while Profit After Tax (PAT) was down 1% y/y to ₦22.1 from ₦22.4bn in Q1 2017. Return on Average Equity (ROAE) of 18.2% and Return on Asset of 2.1% in Q1 2018.
The asset base of the Bank remained strong and robust with growth of 7% in total assets to ₦4.38trn in March 2018 from ₦4.10trn in December 2017. Loans and Advances totaled ₦2.1trn as at March 2018 (December 2017: ₦2.06trn). Customer deposits increased by 12% to ₦2.51trn in March 2018, from ₦2.25trn in December 2017. Capital Adequacy of 19.3% and liquidity ratios of 41.3%, remained consistently above the regulatory minimum requirement.
Non-performing loans stood at 4.7% as at March 2018 (December 2017: 4.8%). Cost of risk increased marginally to 0.9% in Q1 2018 from 0.7% in Q1 2017 on the back of prudent risk management practices during the period.
Net Interest Margin (NIM) of 5.8% in Q1 2018 from 6.7% in Q1 2017, while Cost of Funds (CoF) increased 70bps y/y to 5.8% from 5.1% in Q1 2017. Yield on Asset of 12.4%, down 10bps from 12.5% in Q1 2017 and Cost-to-Income Ratio (CIR) stood at 62.5% in Q1 2018 (Q1 2017: 61.0%).
Commenting on the results, Herbert Wigwe, GMD/CEO said:
“The group delivered resilient results with gross earnings of ₦137 billion and profit after taxes of ₦22 billion, underscoring our ability to deliver sustainable earnings.
We have begun the implementation of key elements of our strategy, and I am excited at the prospects in the coming months. A key part of this is the continued execution of our retail market penetration initiatives, as it remains a strong catalyst to the sustainability of non-funded income growth. In addition, we remain focused on consolidating our market position in the corporate and commercial banking segment.
I am equally pleased to report on the performance of our subsidiaries, who contributed 26% of group profits, highlighting the effective execution of our subsidiarization strategy.
During the period, liquidity and capital adequacy ratios of 41.3% and 19.3% remained well in excess of the minimum statutory requirements.
The implementation of cost measures show great promise, as we wind down expensive structured funding, and also increase our retail penetration. We have also commenced a strategic operating cost reduction program which will see operating cost moderate for the rest of the year.
Our priority for the rest of the year, will be to focus on our retail offerings as we continue to see the benefits of the initiatives intensify over the next few months.”
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