Skye Bank 2011 Earnings: Facts Behind the Figures

The following is a press release form Skye Bank Investor Relations Unit on their 2011 Earnings which we published yesterday.

LAGOS, NIGERIA- Monday 16, APRIL 2012- SKYE BANK PLC (SKYEBANK on NSE and SKYE on Reuters) operates under the brand name SKYE, with foreign subsidiaries in Sierra Leone, The Gambia, and Guinea, reports results for the financial year ended December 2011.

December 2011 vs. December 2010

 

 Gross earnings of N104.8 billion (compared to the N83.9 billion in December 2010)

 A 49% decline in PBT (from N12.7 billion in December 2010)

 A 30% increase in deposits (from N507.6 billion in December 2010 to N658.1 billion)

 22% growth in gross Loans & Advances (up to N519.7 billion from N424.8 billion)

 Return on Assets- after-tax- of 0.6%

 Return on Equity- after-tax- of 4.7%

 Cost to income ratio 59.3%

 CAR increased to 19.6% from 16.9% in the previous year

 

December 2011 (12 months) vs. September 2011 (9 months)

 Total Assets increased by 7% (from N865.6 billion to N927.1 billion)

 15% increase in Gross Loans and Advances (from N452.7 billion to N519.7 billion)

 

 Deposit growth of 16% (from N567.1 billion to N658.1 billion)

The Group Managing Director/Chief Executive Officer (GMD/CEO) of Skye Bank Plc, Mr. Kehinde Durosinmi-Etti, in a statement following the release of 2011 year-end results, stated that:

“Skye Bank recorded growth in major indices of performance in the financial year. The Group reported a 24.8% growth in gross earnings (from N83.9 billion to N104.8 billion), which was represented by growth in interest income and fee and commission income. However, the 48.9% reduction in profit before tax, from N12.7 billion to N6.5 billion, was due to additional provisions of N15.9 billion for diminution in assets value. We maintained our focus on certain business segments in which we have had good track records, in addition to new segments where we exploited business opportunities. For instance, our oil and gas business grew from N79.2 billion in the previous year to N129.7 billion, while similar growth was recorded in the following segments: commercial (N154.6 billion to N203.1 billion), retail (N93.2 billion to N122.4 billion) and treasury, corporate & investment banking (N421.9 billion to N554.1 billion). This growth trajectory reflected in a 29.6% increase in deposit volumes in the year, from N507.6 billion to N658.1 billion, and a 22.3% growth in gross loans and advances from N424.8 billion to N519.7 billion.

The pattern of reduction of our non-performing loan (NPL) ratio remained consistent in 2011, as the ratio dropped significantly to 4.9%, from 11.9% reported last year.

In pursuit of efficiency, we focused on reinforcing our branch network by upgrading facilities, deepening deployment of products and services, and ensuring optimal human resource input for improved customer service.

We reaped good returns from the deepening of our treasury activities, which resulted in 545.9% and 274.2% growth in foreign exchange income and investment income, from N1.2 billion and N1.4 billion in 2010 to N7.8 billion and N5.1 billion respectively.

In conformity with our growth aspirations, we successfully raised additional tier-two capital of $100 million during the last quarter of 2011. This will support our ability to grow and sustain our business.

We have made significant investments in the capacity of our people to give the best service to our customers. This was in the form of training and re-training, optimal performance management, focused and time-based customer service-oriented activities and processes, infrastructure deployment, and employee empowerment”.

Performance Highlights

 Gross earnings of N104.8 billion.

 Loan volumes increased by 22%. Loans & advances include advances under finance lease.

 The Bank focused on the NPL ratio. This reduced the ratio from 11.9% in 2010 to 4.9%.

 PBT decreased by 48.9% in 2011.

 Deposits stood at N658.1 billion increasing 30% from the previous year’s N507.6 billion.

 Capital Adequacy Ratio (CAR) increased to 19.6% (regulatory minimum of 15%).

 

Key Ratios

 Return on assets down to 0.6%.

 Return on equity was 4.7%.

 LDR closed at 78.9%.

 CAR increased to 19.6% from 19.2% the previous year.

 Net Interest Margin of 7.4%.

 NPL ratio was 4.9% for the Bank and 6.3% for the Group.

Cost to Income Ratio down to 59%.

 

 

Looking Ahead in 2012:

Mr. Kehinde Durosinmi-Etti, the GMD/CEO, indicated that, in 2012:

“We will conclude the process of divestment from non-core banking subsidiaries, as approved by our Board of Directors and regulators, during the second quarter of 2012. This will enable us focus on our main intermediation role in Nigeria and in our three foreign banking subsidiaries.

We will grow our business in existing segments, while seeking to expand into new markets and deploy new products and services.

In the new financial year, we will affirm our focus on diversifying our income streams toward non-interest income, in anticipation of interest rate and inflationary pressures, largely from the external environment. We will also re-invigorate our cost management and efficiency apparatus toward attaining optimal returns.

The ‘Cashless/Cash-lite’ policy provides a major vista for our Bank in 2012 and beyond, considering our well regarded footprints in technology-based infrastructure over the years. Therefore, we will continue to deploy top-range Information and Communication Technology (ICT) resources that will provide our customers with a vast bouquet of choices, reduce the strain on our physical facilities, and enable us meet our business growth targets.

At Skye Bank, we will also continue to provide our customers with the best service pivoted upon convenience, innovation, speed, and value. In doing this, the up-scaling of our customer service infrastructure will remain a major area of priority.”