Bank NPLs (12) - Impact of NPLs on Income Trends

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Wednesday, May 27, 2020 / 06:30 AM / by Debtors Africa/ Header Image Credit:  EcoGraphics

 

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G.1. Access Bank

Chart 148: Access Bank NPL Ratio (%) vs PBT (N'bn)

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Source: NSE, Access Bank, Proshare Research

 

Despite the increase of Access bank's non-performing loan to +5.8% in Q4 2019 from +2.5% in Q4 2018, Its profit before tax rose to N115.40bn in Q4 2019 from N103.19bn in Q4 2018.

 

It is expected that when NPL's decline there should be an increase in PBT and vice-versa. There was no clear evidence of movement in different directions between Access Bank's NPL (%) and PBT (N'bn) as they moved in the same direction in some years and moved in different directions in other years.

 

Despite the rise in Access Bank NPL's from +6% in Q4 2009 to +8% in Q4 2010, Access Bank experienced a turn-around in its financials as it recorded a profit of N16.17bn from a loss of N3.96 in the previous year.  In 2019, Access Bank's NPL and PBT moved in the same direction. Access Bank's NPL increased to +5.8% in Q4 2019 from +2.8% in Q4 2018, likewise, its PBT increased to N115.40bn in Q4 2019, from N103.19bn in Q4 2018.


Access Bank recorded a reduction in NPL from +5.3% in Q4 2012 to +2.7% in Q4 2013 instead of an expected rise in PBT, there was a fall in PBT from N46.54bn in Q4 2012 to N45bn in Q4 2013 (see Chart 148).

 

 

G.2 UBA

Chart 149:  UBA NPL Ratio (%) vs PBT (N'bn) 

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Source: NSE, UBA, Proshare Research

 

UBA's PBT rose to N111.30 in Q4 2019, from N106.77bn in Q4 2018 as its NPL fell to +5.3% in Q4 2019 from +6.45% in Q4 2018

 

Contrary to expectations that NPL's have an effect on banks profitability, UBA's financials reveals otherwise. There were periods when a fall in the NPL's led to a rise in the PBT i.e. UBA's NPL fell from +3.7% in Q4 2011 to +1.9% in Q4 2012 contrary to expectations, it recorded a rise in profit to N52.01bn from a loss of N28.5bn.

 

On the other hand, there was a fall in its NPL from +8.8% in Q4 2010 to +3.7% in Q4 2011, contrary to expectations UBA recorded a loss of N28.50bn in Q4 2011 from a profit of N3.22bn in the previous year (see Chart 149). 

 

G.3. Zenith Bank

Chart 150:  Zenith Bank NPL Ratio (%) vs PBT (N'bn) 


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Source: NSE, Zenith Bank, Proshare Research


Zenith Bank's PBT rose to N243.3bn in Q4 2019 from N231.69bn in Q4 2018 as its NPL fell to +4.3% in Q4 2019 from +4.98 in Q4 2018.

 

Zenith Bank recorded a yearly increase in its PBT regardless of the movements in its NPL. Despite the rise in its NPL from +1.63% in Q4 2015 to +3% in Q4 2016, Zenith bank recorded an increase in its PBT from N125.62bn in Q4 2015 to N156.75bn in Q4 2016 (see Chart 150).

 

G.4 ETI

Chart 151:  ETI NPL Ratio (%) vs PBT (N'bn) 

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Source: NSE, ETI, Proshare Research


Despite the marginal rise in ETI's NPL to +9.9% in Q4 2019 from +9.8% in Q4 2018, ETI's PBT rose to N147bn in Q4 2019 from N135.53bn in Q4 2018, 


There is no clear-cut relationship between ETI's NPL and PBT. ETI recorded instances where NPL's increased and its PBT's contrary to expectations increased i.e. ETI's NPL rose from +9.6% in Q4 2016 to +10.7% despite this increase, its PBT rose from a loss of N33.71bn in Q4 2016 to N88.31bn in Q4 2017. 


In Q4 2012, ETI NPL's rose to +5.6% from the previous year, there was a corresponding rise in PBT to N54bn from N43.28bn in Q4 2011 decrying expectations that they would move in opposite directions (see Chart 151). 

 

G.5. Wema Bank

Chart 152:  Wema Bank NPL Ratio (%) vs PBT (N'bn)

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Source: NSE, Wema Bank, Proshare Research


Wema Bank PBT rose to N6.77bn in Q4 2019 from N4.80bn in Q4 2018 despite the significant rise in its NPL to +7.38% in Q4 2019 from +4.98% in Q4 2018.


Wema Bank's NPL does not totally explain movements in the PBT. Despite the fall in its NPL from +52.97% in Q4 2011 to +13.83% in Q4 2012, it recorded an increase in its loss from N3.77bn in Q4 2011 to N4.94bn in Q4 2012.


In Q4 2018, Wema Bank's NPL rose to +4.98% from +3.52% in Q4 2017 instead of a decline in PBT, Wema bank recorded an increase in its PBT from N3.01bn in Q4 2017 to N4.80bn in Q4 2018 (see Chart 152). 

 

G.6. UBN

Chart 153:  UBN NPL Ratio (%) vs PBT (N'bn)

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Source: NSE, UBN, Proshare Research


UBN's PBT rose to N24.8bn in Q4 2019 from 18.45bn in Q4 2018, as its NPL fell to +5.8% in Q4 2019 from +8.7% in Q4 2018.


UBN's NPL does not completely explain movements in its PBT. Despite the rise in its NPL from +5.1% in Q4 2011 to +6.7% in Q4 2012, UBN recorded a rise in its PBT to N9.06bn in Q4 2012 from a loss of N122.41bn in Q4 2011.


In Q4 2013, UBN NPL fell to +5.9% from +6.7% in Q4 2012, instead of a rise in its PBT, it recorded a decline in its PBT to N3.77 in Q4 2013 from N9.06bn in Q4 2012 (see Chart 153).

 

G.7 FCMB

Chart 154:  FCMB NPL (%) vs PBT (N'bn)

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Source: NSE, FCMB, Proshare Research

 

FCMB's PBT rose to N20.13bn in Q4 2019 from N18.44bn in Q4 2018 as its NPL fell to +3.7% in Q4 2019 from +5.9% in Q4 2018.

 

FCMB's NPL does not exactly explain changes in PBT i.e. despite the fall in its NPL from +5.5% in Q4 2010 to +2.8% in Q4 2011, PBT declined from a profit of N9.03bn in Q4 2010 to a loss of N11.35bn in Q4 2011.


In Q4 2018, FCMB NPL fell to +5.9% from +4.9% in Q4 2017, instead of a reduction in

 

profit, FCMB recorded an increase in its profit from N11.46bn in Q4 2017 to N18.44bn in Q4 2018 (see Chart 154).

 

G.8 Fidelity Bank

Chart 155:  Fidelity Bank NPL Ratio (%) vs PBT (N'bn)

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Source: NSE, Fidelity Bank, Proshare Research

 

Fidelity Bank's PBT rose to N30.53bn in Q4 2019 from N25.09bn in Q4 2018, as its NPL declined to +3.3% in Q4 2019 from +5.7% in Q4 2018.

 

Fidelity Bank NPL's does not clearly explain the movements in the PBT. It is expected that fall in the NPL will lead to an increase in PBT and vice-versa. Fidelity bank recorded a decline in its NPL to +3.7% in Q4 2013 from +3.9% in Q4 2012. Contrary to expectations its PBT also recorded a decline from N21.63bn in Q4 2012 to N9.03bn in Q4 2013.

 

In Q4 2014, there was a rise in the bank's NPL to +4.4% from +3.7% in the previous year, contrary to expectations PBT rose to N15.52bn in Q4 2014 from N9.03bn in Q4 2013 (see Chart 155).

 

G.9 Sterling Bank

Chart 156:  Sterling Bank NPL Ratio (%) vs PBT (N'bn)

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Source: NSE, Sterling Bank, Proshare Research

 

Sterling Bank's PBT rose marginally from N9.49bn in Q4 2018 to N10.67bn in Q4 2019 despite its NPL dropping significantly from +8.7% in Q4 2018 to +2.2% in Q4 2019

 

Sterling Bank NPL does not clearly explain the movements in its PBT.  It is expected that fall in the NPL will lead to an increase in PBT and vice-versa. Sterling bank recorded a decline in its NPL to +4.8% in Q4 2011 from +12% in Q4 2010, contrary to expectations there was also a decline in PBT from N4.95bn in Q4 2010 to N3.46bn in Q4 2011.

 

In Q4 2018, there was an increase in Sterling Bank NPL to +8.7% from +6.2% in Q4 2017 contrary to expectations the PBT also recorded a rise from N8.11bn in Q4 2017 to N9.49bn in Q4 2018 (see Chart 156).

 

G.10 GT Bank

Chart 157:  GT Bank NPL Ratio (%) vs PBT (N'bn)

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Source: NSE, Sterling Bank, Proshare Research


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GT Bank's PBT rose to N231.71bn in Q4 2019 from N215.59bn in Q4 2018 as its NPL fell to +6.5% in Q4 2019 from +7.3% in Q4 2018.

 

There is no clear-cut relationship between GT bank NPL and PBT. GT Bank recorded a consistent rise in its profit from 2009 to 2019 despite fluctuations in the NPL. In Q4 2017, the bank recorded an increase in its NPL to +7.66% from +3.66% in Q4 2016, contrary to expectations its PBT recorded a rise from N165.14bn in Q4 2016 to N200.24bn in Q4 2017 (see Chart 157).

 

 

G.11 Stanbic IBTC Bank

Chart 158:  Stanbic IBTC Bank NPL Ratio (%) vs PBT (N'bn)

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Source: NSE, Stanbic IBTC Bank, Proshare Research

 

Stanbic IBTC Bank's PBT rose to N90.9bn in Q4 2019 from N88.15bn in Q4 2018, despite its NPL being constant at +3.9%, as it did not record any change from the previous period.


There is no clear pattern of relationship between Stanbic IBTC Bank's NPL and its PBT. In some years, changes in the NPL led to expected changes in its PBT while in other years PBT did not respond to changes in the NPL. There was a fall in NPL to +6.7% in Q4 2011 from +7.6% in Q4 2010, contrary to expectations there was a corresponding fall in its PBT to N11.24bn from N13.53bn in Q4 2010.

 

Despite the rise in NPL from +5.0% in Q4 2016 to +8.7%, there was a rise in its PBT to N61.17bn in Q4 2017 from N37.21bn in Q4 2016 contrary to expectations (see Chart 158).

 

G.12. FBNH

Chart 159: FBNH NPL Ratio (%) vs PBT (N'bn)

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Source: NSE, FBNH, Proshare Research

 

FBNH's PBT rose to N83.6bn in Q4 2019 from N65.29bn in Q4 2018 as its NPL fell from +24.7% in Q4 2018 to +9.9% in Q4 2019.

 

There was no clear-cut relationship between FBNH's NPL and PBT.  In Q4 2018, there was a rise in NPL to +25.9% from +22.8%. Contrary to expectations its PBT rose from N56.83bn in Q4 2017 to N65.29bn in Q4 2018.

 

In Q4 2015, there was a spike in FBNH NPL from +2.9% in Q4 2014 to +18.1% in Q4 2015, this led to sharp decline in PBT from N94.06bn in Q4 2014 to N21.51bn in Q4 2015 (see Chart 159).


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