The maiden edition of The Citizen Bank Performance Handbook 2015 has been released.

According to a statement issued today in Lagos by the Editor, Mr. Ezra Ikpeama, the research report, which is the first by THE CITIZEN, is an x-ray of the Nigerian banking sector, takes a look at the unfolding effects of the general economic slowdown on banks and the financial markets.

“The painstaking analysis was embarked upon for the purpose of drawing government and regulators’ attention to the critical issues in the economy deserving urgent attention. It is also aimed at unveiling the effects of these macro-economic developments and regulatory policies on the banking sector that constitutes the nerve centre of the economy.
“The banking sector is yet to recover fully from the damaging effects of the last global financial crisis and has come under operating and regulatory pressures once again. Many banks that have been trying to find the recovery and growth path now have to begin struggling for survival once again,” he stated.

Ikpeama said that regulators have, as usual continued to give assurances of good health for the banks, but such assurances did not stop the financial distress and the eventual closure of a number of banks in the heat of the last financial crisis.
“This report provides a timely observation that the adverse operating trends that hurt the financial health of banks before are in force once again.

“It calls for both strategic and innovative actions on the part of banks to shield their operations from the adverse economic trends and supportive regulatory actions to ensure adequate liquidity in the economy generally and prevent excessive competition in the banking sector”.
Noting that nothing hurts banking operations as much as liquidity shortfalls, THE CITIZEN Editor added that loss of liquidity was the cause of the financial distress that led to the closure of many banks during the last financial crisis.

“Regulatory policies have again been moving in the direction of curbing bank liquidity over the past two to three years. The result is a general cut-down on investment portfolios and constrained growth in other earning assets.

“Inability to grow earnings assets is affecting bank income statements adversely by way of slowing revenue growth. Hardly has any bank been able to achieve accelerated growth in revenue since 2013,” he argued.

According to him, against decelerating revenue, two major cost lines were growing rapidly and these have been weakening profit capacity significantly.

“These are loan loss charges and interest expenses, which are claiming rising proportions of bank gross earnings. Rising loan losses reflects the general operating difficulties facing the economy, which calls for an urgent action on the part of the government to prop up economic activity generally.

“Rising cost of funds is a problem for industry, banks and businesses as well as consumers generally. A sustained move in the direction of low interest rates is needed to spur production and consumption forces in the economy,” he said.
Ikpeama said that the policy of single treasury accounts has limited the ability to grow the asset side of the balance sheet. “Banks are applying various approaches such as rights issue, profit retentions and outright borrowings to meet the funding gaps created. There is a renewed effort to cut down operating cost, mostly through workers layoffs in order to compensate for the rising cost of funds and credit losses. The multiplier effects of declining corporate and government spending portends a serious danger to the economy.
“The report shows details of how each bank is responding to the operating and regulatory challenges and the prospects for the full-year performance. It used a five-year track record of income statements and balance sheets of banks to establish the major operating trends.

“It also used the current year’s interim reports to project the likely full-year earnings outcomes.

“With average industry ratio benchmarks, the report makes it clear how each bank’s figures compare or contrast from the general industry picture.
“The general industry trends as well as individual banks conditions should guide regulatory policies towards ensuring stability and healthy growth in the banking sector.

“They also provide a reliable guide to strategic decisions and actions on the part of the banks themselves.
“The study also shows the various competitive leagues in the industry such as leadership by the size of the balance sheet, gross income and profit.

The performance charts show the ability to convert assets into revenue and revenue into profit. Banks that are leading by assets but are lagging by profit are losing asset profit margin more than the others. The analysis brings out clearly each bank’s cost to income relationship and shows how it is either helping or hitting the bottom line.
“A major worrisome trend defined by the report is that both asset turnover and profit margin are declining in the industry. This is an unhealthy trend that needs to be checked otherwise declining profit capacity could degenerate into losses and rising loan losses could hurt bank capital adequacy ratios once again.

“The bearish trend the stock market has taken on banking stocks is a reflection of the growing uncertain outlook of the sector and regulators cannot afford to ignore this signal.

There is no room for pretence in a situation where the banking industry giants are fast becoming penny stocks,” he stated.

“Individuals, institutions and organizations who are interested in obtaining copies of the handbook are kindly requested to call the number: 0810 698 7846; or  visit www.thecitizenng.com for more information”, the statement added. [myad]

Foremost African Financial Institution, Guaranty Trust Bank (GTBank) plc will reward a lucky student customer in one of the Nigerian tertiary educational institutions with a brand new Mini Cooper car during the 3rd edition of what it termed “GTCrea8 Mini Cooper giveaway.”
The promo, which was launched in 2013, provides a platform for the Bank to reward one lucky GTCrea8 customer with a brand new Mini Cooper car.
Information from the bank said that the raffle draw for the Mini Cooper giveaway has been scheduled to hold tomorrow, December 9, at the GTBank Head office in Lagos.
The statement said that two such lucky GTCrea8 customers have been rewarded with a brand new mini cooper car since the launch of the campaign.
“In 2013, Shalom Wigwe Elisha – a 2nd year student of medicine at the University of Lagos became the very first recipient of the prestigious car. Maryam Adebiyi – a student of Lagos state Polytechnic was the next to win the car in 2014. In addition to the car giveaway, 90 undergraduates have been rewarded with scholarships worth 150,000 each over the last 3 years.
“This year, GTBank has continued its tradition of rewarding loyal customers with amazing prizes such as laptops, smart phones, free mobile data and cosmetic kits for aspiring make-up artists. The Bank has also awarded scholarships totaling N900,000 to 6 lucky students in the course of the year.”
The statement quoted the banks Managing Director and Chief Executive Officer (CEO), Segun Agbaje as acknowledging that the younger generation hold the key to our economic future and as such must develop a habit of planning ahead, saving, and investing wisely.
“The GTCrea8 platform,” Agbaje was quoted as saying: “is structured to assist students with their daily and future financial plans by enabling them develop valuable financial literacy and money management skills which subsequently prepares them for greater responsibilities in the years ahead.”
The statement described GTCrea8 account as a trendy, card-based interest bearing account designed especially for undergraduates.
“It is part of the Bank’s value proposition to deliver banking in a different way to young people by engaging them with fun, exciting and interactive activities such as musical Campus Storms and master classes which resonates with their unique demographics. The GTCrea8 train also stormed 21 tertiary institutions across the 6 geo-political zones in Nigeria reducing the cost of on-boarding to the students and promoting entrepreneurship for undergraduates.
“GTBank has consistently played a leading role in Africa’s banking industry. The GTBank brand is regarded by industry watchers as one of the best run financial institutions across its subsidiary countries and serves as a role model within the financial service industry due to its bias for world class corporate governance standards, excellent service quality and innovation.” [myad]