The Central Bank of Nigeria (CBN) tight monetary regulations has slowed the earnings growth of Skye Bank plc, analysis of the financial shows.
For the first nine months through September 2014, Skye Bank’s gross earnings reduced by 4.8 percent to N97.12bn from N102.04bn the same period of the corresponding year (Q3) 2013.
Interest income were down by 8 percent to N79.50bn in Q3 2014 compared with N86.75bn as at Q3 2013 despite a 14.8 percent dip in interest expense to N30.37bn.
Profit after tax (PAT) shrank by 15.3 percent to N9.86bn in Q3 2014 as against N11.65bn the preceding year.
Analysts attribute the stifled growth of Skye Bank’s earnings to the multiplicity of the regulations by the Central Bank such as tightening policy and Asset Management Corporation of Nigeria charge.
The CBN has increased CRR – the minimum cash, as a percentage of customer deposits that each bank must set aside as a reserve – from 4 percent in 2011 to 15 percent for private deposits and 75 percent for public sector deposits.
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The regulator also told lenders to lower fees and commissions to reduce costs to customers.
AMCON Charge, otherwise known as the sinking fund, which mandated all banks to pay certain amount out of total assets, was increased to 0.5 percent from 0.5 percent, a policy that is bleeding profits of Nigerian lenders.
Skye Bank’s cost to income ratio (CIR) remained flattish at 72 percent a reflection of the decrease in operating expense by 0.6 percent to N46.90bn in Q3 2014 from N47.17bn as at Q3 2013.
Loan to deposit ratio increased to 78.12 percent in the review period from 63.9 percent last year a sign of aggressive lending by the bank.
Loans and advances to customers were up by 4.8 percent to N576.0bn to as against N549.85bn the preceding year while deposit to customers reduced by 2.8 percent to N801.74bn.
Total assets dropped slightly by 0.9 percent to N1.10trn in Q3 2014 compared with N1.11trn as at Q3 2013.
Return on average equity ROaE was 1.27 percent in the period under review while the return on average assets ROaA stood at 12.52 percent.
Skye bank’s share price closed at N2.62 on the floor of the NSE while market capitalisation was N34.89bn.
BALA AUGIE
