Banks’ Q3 Profit Haul Dazzles Investors

As the 2012 third quarter unaudited results of quoted money deposit banks make their ways to the public domain, a wave of excitement has returned to the camp of Nigerian shareholders who described the various impressive results of the banks as dividend of their belief in Nigerian financial institutions.

The results, most of which have already been submitted to the Nigerian Stock Exchange (NSE), showed a profound improvement in virtually all the indices, with financial analysts saying it is time for the shareholders to take position in the banks although the shareholders are calling for a sizeable chunk of the earnings in terms of dividend.

A random scan of some of the results last week showed that most of the banks recorded significant leap in their profit margins, although modest improvement was recorded in the area of deposit mobilisation except for some of the banks that went into merger and acquisition last year.

CEO, Partnership Investment Company, Mr. Victor Ogiemwonyi, in his reaction to the positive signals from banks said, “The recent string of good results the banks are reporting is a good sign. It shows the reforms are taking hold and that the banking industry is poised to be the engine of growth for the Nigerian Stock Exchange for the next several months. The third quarter results and the general good economic environment lowering inflation, moderating interest rates and improving external reserves all point to an economy looking up. This will mean that the banks will report good profits and will likely be paying dividends next year. This may make banking stocks attractive to investors.

“We expect improved market activities as investors pile into the market to take advantage of the low valued stocks that will rise as the overall market respond to the upswing.” According to the analyst, time had come for discerning investors to key into the current improvement in banks performance, saying ” Investors should take the opportunity to re- balance their portfolios and make risk management an important part of their portfolio decision making.”

An analysis of the third quarter performance for instance showed that Access Bank Plc, one of the banks that explored the window of mergers and acquisitions last year recorded a breakthrough in its nine months operation this year. Last year, the bank posted a profit before tax of N18.077 billion for its nine-month operation. However, in what has been interpreted as the added value of the acquisition of the defunct Intercontinental Bank Plc, Access Bank was able to declare a profit before tax of N39.112 billion in nine months this year, while its gross earnings jumped from N86.3 billion last year to N162 billion for the first nine months of the current operating year.

culled from allAfrican

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