Despite Economy Headwinds, FBN, ETI, 5 Other Banks Profit Soar by 12% in H1

  Despite Economy Headwinds, FBN, ETI, 5 Other Banks Profit Soar by 12% in H1

Amid challenges facing the Nigerian economy, Ecobank Transnational Incorporated (ETI), FBN Holdings, and five other banks listed on the Nigeria Exchange Limited (NGX) profit after tax rose by 12 per cent in half year (H1) ended June 30, 2021.

The other banks are Unity Bank Plc, Wema Bank Plc, Union Bank of Nigeria Plc, FCMB holdings and Sterling bank Plc.

Analysis of the banks results showed that they cumulatively reported N113billion profit after tax in H1 2021 as against N101.02billion reported in H1 2020.

Of the seven banks, Union Bank and FCMB Holdings and FBN Holdings are only financial institutions that reported decline in profit after tax amid decline in gross earnings and impairment losses on financial instruments.

Specifically, Union Bank reported about 11 per cent decline in profit after tax to N9.84billion in H1 2021 from N11.08billion reported in H1 2020 while FCMB Holdings’s profit after tax closed H1 2021 at N7.56billion, about 22.1per cent decline from N9.7billion reported in H1 2020.

Further breakdown revealed that FBN Holdings profit after tax dropped by 5.5 per cent to N22.45billion in H1 2021 from N23.76billion reported in H1 2020.

The Group Managing Director, FBN Holdings, U.K. Eke in a statement said the Holdings delivered a resilient performance in the half year, reflective of its focus on strengthening the organisation in recent years.

According to him: “We remain committed to our strategic objective of driving further stability in performance, as well as delivering sustainable growth over the years to come.

“In line with our focus on revenue diversification, we continue to grow our non-interest income as we progressively become a more transaction-led institution and implement innovative and technological driven measures to improve overall efficiency. The macro and socio-economic conditions remain challenging given the COVID-19 pandemic and the low-interest rates environment.

“While these points negatively impacted overall revenue generation, we are confident that FBNHoldings can navigate this challenging operating environment and keep delivering sustained innovative solutions that enrich customer experience as well as deepen financial inclusion.”

Conversely, Wema bank in the period under review reported significant increase in profit after tax to N3.72billion, about 149 per cent increase when compared to N1.49billion recorded in prior period.

Analysis of Wema Bank’s results showed that the bank grew its gross earnings by 8.3 per cent and drive its operating income by 30 per cent that impacted on profit after tax.

The Managing Director, Wema bank, Mr. Ademola Adebise in a statement said: “We are pleased to release our results for the first half of the year.

“Our performance speaks to the spirit of resilience that runs through the organization as we have strongly bounced back from the COVID-19 impacted performance of the same period in 2020. As the economy opens back up fully, we expect to see a stronger performance for full year 2021.”

He added that: “Over the course of the second half of 2021, the bank will continue its strong focus on the digital business, pushing for further gains in customer acquisition, consumer lending and transaction volumes while on the commercial side of the bank, we will continue to aggressively grow our commercial lending business alongside trade and other revenue lines.”

Further investigation revealed that of the N113billion profit after tax reported by the seven banks in H1 2021, ETI contributed 55 per cent by recording N62.55billio profit after tax in H1 2021 from N48.53billion reported in H1 2020.

The Ecobank Group CEO, Mr. Ade Ayeyemi, in a statement said: “We saw continued and sustained resilience in our performance, which is indicative of the success of our ‘execution momentum’ drive.”

In addition, Unity Bank’s profit after tax rose by 34.2per cent to N1.38billion in H1 2021 from N1.03billion reported in H1 2020 while Sterling Bank reported about five per cent profit after tax to N5.69billion in H1 2021 from N5.42billion reported in H1 2020.

The Managing Director/CEO, Unity Bank, Mrs. Tomi Somefun had noted that the double digits growth recorded in both earnings and profits.

She added, H1 2021 was the result of a portfolio plan which the Bank set out in the beginning of the year to diversify its portfolio whilst incrementally pursuing as set creation in petrochemical downstream, consumer, healthcare and general commerce with agribusiness providing the bulwark for identified business and brand benefits.

She stated that the Bank will be looking to strengthen its balance sheet from the liability side as it continues to grow its brand franchise in many areas of the retail market by promoting and leveraging its Agriculture value chain businesses as an offshoot to achieve better performance ratios that enable it expand the scope of business for even greater outcome.

Peaking on the results, capital market analyst said the unaudited results of the seven banks indicated economy challenges, stressing that other sectors that have submitted the same results outperformed the banking sector.

The Vice president, Highcap securities, Mr. David Adonri said the performance of banks came as a surprise despite the ease of COVID-19 lockdown in the economy.

He said, “This time last year, everywhere was lockdown and this year, economy has opened up and we exited recession. These banks weak performance put integrity on their results. The good thing is that some banks performed better and there is hope that for the banking sector to deliver good earnings this year.

“However, when you compare these banks performance to MTN Nigeria, Seplat, among others showed that other sectors are doing better than the banking sector. But, we are still waiting for H1 2021 results of the big banks on NGX.”

South African President and President of the African Union (AU), Cyril Ramaphosa, has announced the commencement of monthly shipments of vaccines acquired by the AU/African Vaccine Acquisition Task Team (AVAT) to member states of the pan-African union.

An initiative by the AU member states to pool their purchasing power, the AVATT had on March 28, 2021 signed a historic agreement for the purchase of 220 million doses of the Johnson & Johnson single-shot COVID-19 vaccine, with the potential to order an additional 180 million doses.

The Johnson & Johnson vaccine was selected for this first pooled procurement for three reasons.

First, as a single-shot vaccine, it is easier and cheaper to administer; second, the vaccine has a long shelf-life and favourable storage conditions.

It is also partly manufactured on the African continent, with fill-finish activities taking place in South Africa.

Ramaphosa said: “This is a momentous step forward in Africa’s efforts to safeguard the health and well-being of its people. By working together and by pooling resources, African countries have been able to secure millions of vaccine doses produced right here in Africa.

“This will provide impetus to the fight against COVID-19 across the continent and will lay the basis for Africa’s social and economic recovery.”

The first monthly shipments are expected to arrive August 5 in several member states, and shipments will continue for a total of 6.4 million doses in August.

Monthly shipments will continue and be continually ramped up, with a target of delivering almost 50 million vaccines before the end of December.

By January, the number of vaccines being released will be in excess of 25 million per month. In collaboration with the Africa Medical Supplies Platform (AMSP), UNICEF is providing logistical and delivery services to the member states.

The vaccine acquisition is a unique milestone for the African continent. It is the first time Africa has undertaken a procurement of this magnitude involving all member states.

It also marks the first time that the AU member states have collectively purchased vaccines to safeguard the health of the African population.

Four hundred million vaccines are believed to be sufficient to immunise a third of the African people and bring Africa halfway towards its continental goal of vaccinating at least 60 per cent of the population.

International donors have committed to deliver the remaining half of the doses required through the COVAX initiative.

It is significant that these vaccine doses are being produced on the African continent at the Aspen Pharmacare facility in Gqeberha in South Africa.

This is part of the concerted effort by African countries to rally the world to support the TRIPS waiver for technology transfer and active pharmaceutical ingredients to develop her own manufacturing capabilities.

AU Special Envoy, Mr Strive Masiyiwa, said: “Delivering our first doses to African Union member states is an unprecedented milestone. We are deploying relentless efforts to help each member state to reach its goal of immunising 60 per cent of Africans, as recommended by the Africa CDC. Johnson & Johnson AVAT-purchased single-shot vaccines will enable us to considerably improve our vaccination level across the continent.”

The Director of the Africa Centres for Disease Control and Prevention (Africa CDC), Dr John Nkengasong, said: “During the last months, we have seen the vaccination gap between Africa and other parts of the world widen, and a devastating third wave hit our continent. The deliveries starting now will help us get to the vaccination levels necessary to protect African lives and livelihoods.”

The agreement with Johnson & Johnson was made possible through a $2 billion facility provided by African Export-Import Bank (Afreximbank), which are also the financial and transaction advisers, guarantors, instalment payment facility providers and payment agents.

The President and Chairman of the Board of Afreximbank, Prof. Benedict Oramah, said: “The very low access to vaccines has exposed Africa to a devastating third and fourth waves of COVID-19.

“Death rates are rising and economies are becoming increasingly vulnerable. We are encouraged by the successful commencement of this vaccine roll-out, which will help contain the spread of the virus and protect lives and livelihood. Afreximbank is pleased to have contributed in the historic procurement of vaccines by AVAT.

“We look forward to better days ahead for our people through this effort.”

He explained that this is a proud moment for the continent, adding that the vaccines, partly manufactured in South Africa, are a true testament that local production and pooled procurement as envisioned in the African Continental Free Trade Area (AfCFTA) are key to the attainment of a more sustainable post-Covid-19 economic recovery across the continent.

The United Nations (UN) Under-Secretary-General and Executive Secretary of the United Nations Economic Commission for Africa (UNECA), Dr. Vera Songwe, stated that Africa can create over five million more jobs if more health commodities are manufactured on the continent.

Regular technical meetings of the African Ministers of Finance, who collaborated in an unprecedented manner to make it possible, were coordinated by UNECA.

The vaccine acquisition and deployment is supported by an innovative partnership between the World Bank, AU and AVATT to expedite access to vaccines throughout the continent.

Through this partnership, the World Bank is supporting the AVATT initiative with resources to allow countries purchase and deploy vaccines for up to 400 million people across Africa.

The World Bank Managing Director, Operations, Axel van Trotsenburg, said: “Today marks an important milestone in the AU’s tireless efforts in bringing COVID-19 vaccines to Africa.

“The World Bank is very pleased to be part of the AU campaign to get the African continent vaccinated, including by helping finance the purchases of the needed doses and supporting the administration of the shots.”