Background
NPF Microfinance Bank plc (formerly NPF Community Bank Ltd) was incorporated May 1993, as a limited liability company under the provision of the Companies and Allied Matters Act cap C20 LFN 2004.The bank provides banking services to both serving and retired officers and men of Nigeria Police, its ancillary institutions and the general banking public.
NPF Microfinance Bank has its head office located at 1 Ikoyi Road, Obalende, and other branch offices in Obalende, Ikeja, Abuja Main, Port Harcourt, Kano, Osogbo, Benin City, Onitsha, Sokoto, Yola, and Lokoja. The bank has the intention to open an additional three offices organically in all the police commands in the federation.
The bank has 2.28 billion shares outstanding with shareholders fund of N3.91 billion as of December 2013.
Financial results for 2013
For the year ended December 2014, NPF Microfinance posted double digit growth in revenue of 18.33 percent to N1.93 billion from N1.63 billion in the corresponding period of 2012 (FY12).
The company could not translate the impressive top line performance to bottom-line growth as a result of huge operating expenses, thus profit before tax declined by 18.78 percent to N512.07 million in FY13 from N630.53 million as of FY12.
Profit after tax also shrank by 17.76 percent year-on-year to N391.32 million compared with N476.83 million as of December 20132. Net margin, a measure of profitability and efficiency, also dipped to 20.22 percent in FY13 from 29.17 percent as of FY12.
Operating expenses, which pressured profits, surged by 41.21 percent to N1.339 billion in 2013 as against N948.01 million in 2012. The company had more than half of its operating income eaten by operating expenses as cost to income ratio, a gauge for this jumped to 72.3 percent in FY 2013 from 60.01 percent as of FY 2012.
The bank may incur further cost if it fully adopts the International Financial Reporting Standard (IFRS) software. The motive of this new accounting format is to enhance accounting transparency and disclosure.
Loans and advances in the review period were up 16.30 percent year on year to N5.56 billion compared with N4.78 billion as of FY12.
Deposit from customers for the year ended December 2013 increased by 17.73 percent to N3.85 billion in 2013, from N3.27 billion in 2012. The loan to deposit ratio fell to 144.05 percent in FY13 compared with 146.1 percent as of FY12.
In order to strengthen the Nigeria microfinance sector to deliver better service to customers, the Other Financial Institutions Department (OFID) of the Central Bank of Nigeria (CBN) warned that microfinance banks (MFBs) should increase their capital base above the current N20 million.
NPF Microfinance Bank is aggressively expanding its assets base to tap into the Nigeria SME market as total assets in the review period spiked by 12.87 percent year-on-year to N8.68 billion in 2013, compared with N7.69 billion in 2012.
Share performance and outlook
The company’s share price closed at N1.12 on the floor of the Nigerian Stock Exchange, while market capitalisation was N2.56 billion on the same day.
