5 Banks declare 7% income on loans & advances in H1

Five commercial banks operating in the country have recorded a seven per cent marginal interest income on loans & advances in the half-year (H1) ended June 30, 2019 results.

Analysis of the financial reports of the five banks considered for the period under review, showed that the lenders were prudent in lending out to real sector amidst 2019 general elections and uncertainty surrounding the nation’s economy.

Also, the low yield environment also contributed to interest income banks generated in the period under review.

The Daily Times checks, however, showed that the lenders reported an accumulative N876.35 billion interest income in H1 2019 as against N822.02 billion reported in H1 2018.

The commercial banks include Guaranty Trust Bank plc (GTBank); Zenith Bank Plc; Fidelity Bank; Access Bank Plc and United Bank for Africa Plc (UBA).

For the H1 2019 under review, GTBank reported 8.4 per cent decline on interest income to N146.45 billion in H1 2019 from N159.87 billion in H1 2018.

The lender explained that, its interest income decline was as a result of declining yield environment in the period under review relative to the prior period

while earning asset yield also dropped by 101 basis points from 13.07 per cent in H1 2018 to 12.06 per cent in H1 2019 as a result of portfolio yield on Treasury-Bills which averaged 15.6 per cent in H1 2019 as against 17.4 per cent in H1 2018.

The bank explained further that reduction in yield on local currency risks assets from 16.08 per cent in H1 2018 to 16.1 per cent in H1 2019.

For Zenith Bank, the lender explained its interest income declined by six per cent to N214.6 billion in H1 2019 from N228.67 billion in 2018, as a result of the decrease in yields on interest-bearing assets such as interest income generated on loans & advances that dropped by 21 per cent to N115.04 billion in H1 2019 from N146.43 billion reported in H1 2018.

However, Access Bank with the merger with Diamond Bank reported 46 per cent interest income generated in the period to N272.9 billion as against N186.7billion reported in the prior half year of 2018.

According to the GMD/ CEO, Access Bank, Herbert Wigwe, “the group’s inaugural pos-merger audited report recorded a strong performance in the first half of the financial year, notwithstanding the slow and untenable macro environment.

The results show a sustainable business model coupled with effective execution as we make solid gains towards the achievement of our strategic goals.”

In addition, UBA gained 9.4 per cent on interest income to N204.9 billion in H1 2019 from N187.29billion in H1 2018 while Fidelity Bank’s interest income rose by 9.9 per cent to N84.29billion from N76.7 billion reported in H1 2018.

The Group Managing Director/CEO, UBA, Mr Kennedy Uzoka, in a statement said “Despite the subdued yield environment in some of our large markets, we achieved a nine per cent growth in interest income and defended the net interest margin.

“We also achieved a 39per cent growth in our electronic banking revenues, as we broaden and deepened our digital banking play across Africa.

Revenues from our remittance and funds transfer businesses grew 69per cent and 53per cent respectively. All these factors attest to the efficacy of our strategies and the resilience of our business model.”