Having achieved significant growth in its International Financial Reporting Standards (IFRS) audited financial result for the year ended December 31, 2012, Skye Bank plc is now moving for further expansion through capital raising of N70 billion.
Financial analysts and market commentators have applauded the bank’s profit returns and other performance growth indicators as heralding a new growth phase for the bank.
The bullish and impressive performance of the bank during the year under review was anchored on sound business models, effective cost management measures and other factors that have proven to be game changers. Business prospects for the 2013 financial year are also bright as could be seen from the first quarter’s result of the bank released recently.
The highlights of the bank’s result for the year 2012 include significant growth in profitability, marked increase in total balance sheet size, reduction in cost structure, growth in deposit level, solid liquidity and strong capital base.However, the bank has concluded plans to raise fresh N70 billion in fresh capital to strengthen its balance sheet and support its business expansion.
Kehinde Durosinmi-Etti, managing director/CEO of the bank, said the bank would raise tier two capital before the end of the third quarter and seek additional funds through tier one issue in the nearest future, saying the bank had been growing and so needs to shore up its capital.
According to him, given the way the bank had optimised its capital, additional funds would lead to better value creation for all stakeholders.
In addition, the bank’s boss hinted that the bank might also consider acquiring another bank if such a move will add significant competitive advantage to it. It is expected that the bank may go for one of the three nationalised banks – Enterprise Bank, Keystone Bank and Mainstreet Bank – which AMCON is planning to sell.
Audited report and accounts of the bank for the year ended December 31, 2012, showed improvement in profitability as it harnessed its vast business base and increased efficient cost management to deliver impressive returns to shareholders.
The audited report of the bank was prepared in line with the IFRS and approved by all financial services regulatory agencies, was presented to the investing public recently.
Key extracts of the audited report showed that profit after tax leapt to N12.64 billion in 2012, representing an increase of 872.6 percent on N1.30 billion recorded in 2011. Profit before tax had jumped by 480.9 percent from N2.84 billion in 2011 to N16.51 billion in 2012. The bank maintained a steady top-line in 2012 with net interest income and net non-interest income of N44.50 billion and N22.60 billion, respectively.
On the basis of the impressive bottom-line, the board of the bank has recommended an increase in dividend per share from 25 kobo paid for 2011 business year to 50 kobo for 2012.
This performance underlined it as a return-driven bank. Earnings per share increased to N1.01 in 2012 as against 20 kobo in 2011. At current market value, earnings yield stands at about 16.6 percent while dividend yield stands at 8.2 percent, within the top bracket of earnings and yields of quoted equities. A dividend cover of 2.02 times for 2012 as against 0.80 times for 2011 underlines the ability of the bank to sustain its impressive dividend payouts.
Commenting on the report, Durosinmi-Etti said the report reflected the commitment of the bank to its goal of quality and sustained growth and returns to shareholders, noting that the improvement in the intrinsic profitability of the bank underscored management’s grasp of competitive edges that the bank should build on as it progresses to its target of a leading top-tier bank.
According to him, “in a year of impactful regulatory interventions including tight monetary policies, we recorded growth in the most of our performance indicators. For instance, we grew our interest income by 35 percent from N74.9 billion to N101.0 billion, signalling an accretion in our volume of business transactions, while customer deposits grew by 22 percent, from N645.5 billion to N790.1 billion.
Kehinde Durosinmi-Etti
