Skye Bank declares N102b gross earnings

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Skye Bank Plc has leveraged on its increasingly efficient cost management and stable market share to optimize profitability in the third quarter as gross earnings rose to N102 billion within the nine-month period, from N94 billion in the corresponding period in 2012.

The Bank’s net interest margin increased by 12 percentage points from 47 percent to about 59 percent underlying the success of its focus on core commercial banking operations and investments in services delivery.

Interim earnings report for the third quarter ended September 30, 2013, which was prepared in compliance with the International Financial Reporting Standards (IFRS), showed that the Bank sustained steady growth in top-line earnings and made impressive growth in core banking profitability but its net bottom-line was constrained by regulatory costs.

The nine-month report showed that while interest income grew by 13.5 percent, net interest income rose by 42.04 percent. Net interest margin, which measures the profitability of the core banking operations, had increased from 47.08 percent in third quarter 2012 to 58.88 percent in third quarter 2013. The strong core profitability muted the adverse impact of industry-wide cost headwinds on the net bottom-line of the Bank. Various regulatory policies and tightened liquidity including the introduction of 50 percent Cash Reserve Ratio (CRR) on public sector deposits have generally put pressure on profitability margins of banks.

The group results showed that gross earnings increased to N102.04 billion in 2013 as against N94.13 billion in comparable period of 2012. Interest income had increased from N76.41 billion to N86.76 billion. Net interest income rose from N35.97 billion to N51.09 billion. Group operating profit also rose by 21.6 per cent from N50.79 billion to N61.74 billion.

However while depreciation and amortization dropped from N3.92 billion to N3.46 billion, other operating expenses-including regulatory costs and fees, increased from N 7.19 billion to N33.89 billion. This resulted to an increase in total operating expenses to N47.17 billion in 2013 as against N34.24 billion recorded in comparable period of 2012. With these, Profits Before and After Tax stood at N14.56 billion and N11.65 billion respectively.  It had recorded pre and post-tax profits of N16.55 billion and N13.23 billion in 2012. With earnings per share at 88 kobo, the net profit still shows robust return outlook for Skye Bank. Earnings yield at current market price is more than 19 percent.

Commenting on the results, Group Managing Director/Chief Executive Officer, Mr. Kehinde Durosinmi-Etti, said the results have demonstrated the capacity of the Bank to sustain continuous improvement in major performance indices.

According to him, the moderate growth was commendable in the context of the several regulatory policies and tightened liquidity which has constrained profitability margins across the industry.

He noted that with the tightened regulatory policies, increased levies and general operating costs, the Bank will continue to improve on its processes and cost reduction strategies while it continuously explores other ways of generating revenues and enhancing value for shareholders.

He said the Bank would continue to deepen existing relationship with its customers by providing convenient and innovative service that is tailored towards their business needs.

“We will use more of our electronic platforms and distribution channels, while we invest more in technology to serve our customers better. Our customers will continue to experience secure and convenient service with our newly launched Customer Service Charter, which was pivoted on transparency, accessibility accountability and reliability,” Durosinmi-Etti said.

He pointed out that as part of efforts to continuously use technology in improving operational process and providing exceptional service; the Bank is currently upgrading its core-banking application software (Flexcube) which involves the migration from Flexcube6.0 to the latest technology which is Flexcube12.0 version.

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