In the Bank’s quarterly update to investors and analysts, Yemi Adeola, the Managing Director/ Chief Executive, stated:
‘I am pleased with our third quarter performance, which showed a 41.3% growth in profit before tax despite pressures on earnings arising from monetary policy changes. Our bottom-line was driven by improvements in revenues and a 29.6% reduction in impairment charges. Interest income increased by 14.8%, while interest expense declined by 2.5% resulting in a 32.8% growth in net interest income. We recorded a 19.6% growth in total assets to N846.7 billion and a 19.0% growth in deposits to N679.0 billion with a 100 basis points reduction in the cost of funds to 4.9%.
As part of the initiatives to support our retail banking proposition, we have re-aligned our business by market segments for a more focused market reach. We continue to increase our transaction channels and are on track to deliver an additional twenty-one branches and 500 Automated Teller Machines (ATMs) by the end of the year.
Following our Extra-ordinary General Meeting billed for November 11, we plan to conclude the ongoing private placement before the end of the year. This will put us in a strong competitive position to achieve our growth plans in the coming quarters. In the meantime, we remain focused on efficiency and are optimistic that the full year returns will be in line with our earlier Management guidance.’
Financial Highlights
Income Statement
· Net interest income rose by 32.8% to N32.2 billion (Q3 2013: N24.2 billion) feeding from a 14.8% growth in interest income to N56.7 billion and a 2.5% decline in funding costs to N24.5 billion
· Non-interest income also grew by 3.7% to N16.3 billion (Q3 2013: N15.7 billion) driven by a 38.2% growth in trading income to N4.4 billion
· Net operating income rose by 28.4% to N45.0 billion (Q3 2013: N35.1 billion) on the back of growth in net interest income and a 29.6% reduction in impairment charges
· Operating expenses increased by 25.7% to N36.5 billion (Q3 2013: N29.1 billion) driven by on-going investments in branch refits and expansion, and rollout of alternative channels
· Profit before tax rose by 41.3% to N8.5 billion, while profit after tax rose by 39.2% to N7.1 billion despite a 52.8% increase in income tax
Statement of Financial Position
. Net loans & advances increased marginally by 1.0% to N325.0 billion (Dec. 2013: N321.7 billion) due to our selective approach to asset creation
. Customer deposits increased by 19.0% to N679.0 billion (Dec. 2013: N570.5 billion) driven by low-cost funds
. Shareholders’ funds increased by 2.5% to N65.1 billion(Dec. 2013: N63.5 billion) due to profit accretion
· Overall, total assets excluding contingent liabilities rose by 19.6% to N846.7 billion (Dec. 2013: N707.8 billion)
Financial Ratios
| Indicator | Q3 2014 | Q3 2013 |
| Pre Tax Return on Average Equity (annualized) | 17.6% | 16.9% |
| Post Tax Return on Average Equity (annualized) | 14.7% | 14.3% |
| Return on Average Assets (annualized) | 1.5% | 1.2% |
| Earnings per Share | 33k | 32k |
| Yield on Earning Assets | 13.5% | 14.3% |
| Cost of Funds | 4.9% | 5.9% |
| Net Interest Margin | 8.6% | 8.4% |
| Cost-to-income Ratio | 75.4% | 72.7% |
| Sep 2014 | Dec 2013 | |
| NPL Ratio | 2.1% | 2.1% |
| Capital Adequacy Ratio | 10.02% | 14.2% |
| Liquidity Ratio | 37.2% | 43.2% |
| Loan to Deposit Ratio | 47.9% | 56.4% |
