According to the report, the core income
segment supported this performance, driven mainly by improvements in funding
cost as non-core income contrastingly declined year-on-year.
Consequently, the report disclosed that the
bank recorded an EPS of N1.69 in 2021 compared with N1.24 in 2020. The report
contained a declaration of an interim dividend of N0.20 per share representing
17.6% growth from N0.17per share in 2020.
The bank, also recorded a 8.3% year-on-year
growth in interest income to N222.63 billion as all major lines recorded gains
while interest on loans and advances to banks growth by 377.6% year-on-year to
N10.38 billion, followed with investment securities which soared up by 5.1%
year-on-year to N87.24 billion, while loans and advances to customers also
jumped by 4.0% year-on-year to N118.44 billion and cash and bank balances
growth by1.4% year-on-year to N6.57 billion. Expectedly, the growth in income
from investment securities was strong considering the reinvestments of maturing
funds in higher-yielding instruments compared to levels obtainable in the prior
quarter. Likewise, growth in loans to banks and customers soared by 96.3% and
4.1%, respectively significantly contributed to the strong performance.
Nevertheless, interest expense declined by
13.6% year-on-year to N74.56 billion as the bank recorded moderations across
all contributory lines save for expense on interest-bearing liabilities up by
26.7% year-on-year to N25.07 billion. The largest decline was recorded on
interest expense on deposits from customers down by 20.5% year-on-year to
N42.43 billion as the bank’s CASA mix improved in six months 2021 of 84.3% to
2020 Full Year of 81.8%.
Consequent to the income growth and declining
expenses, the bank recorded an expansion in net interest income up by 24.1%
year-on-year, further supported by the significant decrease in loan loss
expenses down with 7.0% year-on-year to N4.14billion. Eventually, net interest
income settled 29.1% higher year-on-year at N143.93billion.
Nonetheless, non-interest income declined
during the period by 16.8% year-on-year to N64.38 billion, driven by FX
revaluation which was down of N2.84 billion compare with 2020’s gain of N8.00
billion and derivatives declined to N5.27 billion to the six months in 2020’s gain
which stood at N9.43 billion as well as the decline in gains from investment
securities by 55.5% year-on-year to N1.96 billion. The aforementioned offset
the growth in net fees and commission income up by 18.6% year-on-year to N45.77
billion; a consistent trend observed across the industry as electronic banking
transaction volumes improve.
According to the report, operating expenses
closed relatively flat, growing moderately by 0.5% year-on-year, as increasing
regulatory cost pressures from NDIC premium which soared by 27.3% year-on-year
to N7.11 billion and AMCON levy up by 24.1% year-on-year to N27.82 billion were
offset by moderations in personnel, building maintenance and business travel
expenses.
Consequently, the bank’s operating income up
by 10.3% year-on-year advanced faster than opex, leading to an improvement in
operational efficiency while cost-to-income ratio settled lower at 63.8%
relative to 69.9% in the prior year’s corresponding period.
“Overall, profitability was more robust, with
profit-before tax recording a 34.2% year-on-year growth to N76.19 billion while
profit-after-tax came in 36.3% higher at N60.58 billion despite the higher
income tax expense up by 26.4% year-on-year to N15.61 billion.
Experts at Cordros Research in their comment says the bank’s performance remains impressive given the challenging core business environment.
They envisage this strong earnings growth would remain
till full-year, given our expectations of sustained momentum in the
acceleration of loans and higher yields obtainable to reinvest maturing assets.
Analysts also expect the bank’s continued improvements in operational
efficiency to propel earnings further.