Nigeria News

Nigeria: At Last, Bridged Banks Bounce Back to Profitability

MD, Enterprise Bank, Mallam Ahmed KuruFinally, the three bridged banks in the country appeared set to join the fray of other banks in terms of profitability, having put the issue of distress and systemic failure behind them.

An indication to this was given by their return to profitability in their 2012 operations. This is because the banks, Mainstreet Bank Limited, Keystone Bank Limited and Enterprise Bank Limited, which emerged from the old three rescued banks namely, Afribank Plc, Bank PHB Plc and Spring Bank Plc, respectively, are set to declare various profit margins in their 2012 financial year subject to the ratification of their results by the Central Bank of Nigeria.

However, among the three banks, Mainstreet Bank appeared to be the most profitable in their 2012 operation. For instance, information on unaudited accounts showed that while Mainstreet Bank posted a profit after tax of N18billion, Keystone Bank and Enterprise Bank recorded N5billion and N7billion as profit after tax, respectively.
However, analysts explained that the figures are subject to change after CBN’s ratification.

The three banks, in the course of the year also announced different strategies to give their branches facelifts.

None of the banks was ready to confirm the results since the final approval is yet to be given by the CBN.

An industry source, who was not surprised by the improved performance of the banks said, it is obvious the three bridge banks have put the crisis that trailed their start-up behind them, saying they are now competing favourably with other operators with ease.

The management of Mainstreet Bank, for instance recently rolled out some of the programmes aimed at improving the fortune of the bank and this include the drive to switch to a new banking application,  Finacle, training programmes for the staff and branch remodelling, among others..

Speaking in the same vein, Managing Director, Enterprise Bank, Mallam Ahmed Kuru said the current management of the bank has done a lot to give the institution a good focus. He explained that Enterprise Bank is already on the path of profitability and that the tempo will be sustained.

The new threshold of profitability was a confirmation of a recent assurance by the Asset Management Corporation of Nigeria (AMCON) that the banks have all broken even and will soon return to profitability.

Speaking on the performance of the banks, Executive Director, Finance and Operations, AMCON, Mrs. Mofoluke Dosunmu said the banks have taken the necessary steps to drastically reduce the rate of their loss, through the efficient management of the banks.

Speaking a recent public forum, she said, “I would be careful to say whether the bridged banks are profitable. What I would say is that they have taken necessary measure, corrective steps to ensure that the banks run better, going forward, thereby, and showing improved performance.

“You find that the rate of loss has definitely changed drastically for those that have not broken even. And some of them have broken even.

“But if you’re talking about a whole year, while they might have been making loses as at December, between then and now they have broken even. But if you are looking at a whole year’s profit for 2011, you might not find profit at the end of that whole year but if you compare it with what it was before, you will see an appreciable difference.”

Dosunmu said confidence has been restored in the bridged banks, adding that they are now effectively competing with other banks in the country.
She explained that the segregation among the banks, especially in the area of healthy and unhealthy banks, has fizzled away.

According to her, “The bridged banks have decreased their reliance on term deposits. If you look in terms of percentages from what you had before – where you had current account deposits being only about 30 per cent, now it is almost 50 per cent. So that has reflected in the confidence back in the banks.

“It has reduced the case of frauds and it also reflects in their other income like fees and commissions because people don’t just put money in current account, they actually do business with the institution, which result in things like COT, fees and commission,” she explained.

“But if you’re talking about a whole year, while they might have been making loses as at December, between then and now they have broken even. But if you are looking at a whole year’s profit for 2011, you might not find profit at the end of that whole year but if you compare it with what it was before, you will see an appreciable difference.”

Dosunmu said confidence has been restored in the bridged banks, adding that they are now effectively competing with other banks in the country.

She explained that the segregation among the banks, especially in the area of healthy and unhealthy banks, has fizzled away.

According to her, “The bridged banks have decreased their reliance on term deposits. If you look in terms of percentages from what you had before – where you had current account deposits being only about 30 per cent, now it is almost 50 per cent. So that has reflected in the confidence back in the banks.

“It has reduced the case of frauds and it also reflects in their other income like fees and commissions because people don’t just put money in current account, they actually do business with the institution, which result in things like COT, fees and commission,” she explained.

Anthony-Claret Onwutalobi
Anthony-Claret Onwutalobi
Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC and CEO of Portia Web Solutions. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.
https://www.codewit.com

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