Banks push gains with offshore operations

Nigeria’s tier one banks are witnessing increased contributions from their offshore subsidiaries as their operations gather momentum. They experienced record growth from their international subsidiaries as pre-tax profit from their operations surged by an average of 37 percent across the class.

The banks also recorded cumulative pre-tax profit increase of N58.9 billion in FY 2014, from N43 billion in FY 2013, according to full year financial statements released by the banks.

Analysts said that the development had justified the decisions of the banks, which control over 70 percent market share in terms of assets and loans growth to have opted for Holden Company (Holdco) structure.

A breakdown of their results shows that Access Bank’s international subsidiaries’ profit spiked the most, growing by 73 percent from N5 billion in 2013 to N8.9 billion, and in the process, increased its contribution to the parent company’s profit from 12 percent to 17 percent.

Access Bank’s increased international profit was driven by a 173 percent growth in its United Kingdom operation, an 83 percent growth in Gambia, and a 45 percent growth in Ghana.

UBA’s international banking profit also grew by 42 percent to N16 billion, from N11 billion in 2013, with the international business’ share of group profit rising from 20 percent to 29 percent.

UBA’s international profit was driven by a 648 percent growth in Congo Brazzaville, 405 percent growth in Liberia, 224 percent growth in Gabon, 22 percent growth in Kenya, and 17 percent growth in Senegal.

“UBA is gaining critical mass across its target markets and it continues to leverage her products to increase the share of customers’ wallet in the African banking space,” said Kennedy Uzoka, group deputy managing director/CEO, UBA Africa.

Zenith Bank’s international profit, which rose by 38 percent, was driven by a 240 percent growth in Gambia operations, 58 percent profit growth from Ghana, and 6 percent uptick from the United Kingdom.

First Bank’s 23 percent international profit growth was driven by a 935 percent growth from Sierra Leone, 286 percent growth from Guinea, 252 percent from Ghana, and 21 percent growth from the United Kingdom.

Guaranty Trust Bank, which recorded the least international profit growth of 18 percent, was driven by a 1026 percent profit growth from its Kenya Group (covering Kenya, Rwanda and Uganda), 61 percent profit growth in Sierra Leone, 26 percent growth from Liberia, and 22 percent growth from the United Kingdom.

Data from the banks’ FY figures show that Nigerian banks are seeing significant growth from key markets within West Africa, most notably Ghana and Gambia. Significant growth also came from the UK.