Yemisi Izuora
Skye Bank Plc has announced pre – tax profits of N6.2 billion, representing an increase of 82 per cent over the N3.4 billion recorded during the same period in 2014.
The expanded business activities is immediately reflected in the sharp rise in gross earnings which rose to N42.3 billion in the first quarter of 2015 from N34.3 billion in 2014, appreciating by 23 per cent.
The Group Managing Director of the bank, Mr. Timothy Oguntayo, said during the Annual General Meeting (AGM) that the bank’s bottom-line followed the growth movement as net profit or profit after tax sprang up to N5.0 billion during the review period compared to N2.7 billion achieved during the corresponding period in 2014, an 85 per cent rise.
He added that In marginal terms, pretax profit margin for the period rose to 14.7 percent from less than 10 percent in the corresponding quarter. In percentage terms, this is over 49 percentage points from the equivalent quarter. What this means is that where the bank used to translate every one hundred naira put in the business to N9.9, in the quarter under review, it made N14.7.
The result is a strong indication of a more efficient bank that promises to consolidate on the gains.
The bank, according to him acquired Mainstreet Bank Limited to tap opportunities in retail banking across the country and the acquisition is beginning to yield appreciable results as the consolidated result for the first quarter ending March 31, 2015 submitted to the Nigerian Stock Exchange (NSE) shows a significant rise in earnings and profits, thus justifying management’s strategic decision of an acquisition that had led to a bigger bank.
Oguntayo, added that the bank had completed the integration of its operation with Mainstreet Bank by 50 per cent.
He said, “The strategic intent of the acquisition of Mainstreet business is firstly for economies of scale. Firstly, there are locations Mainstreet is present which we are not, especially the South-East and some other areas.
“Therefore, having presence in some of those areas will help us to tap from the opportunities there. And most of those areas are actually retail banking related areas; this will help us in to mobilise low-cost deposits.
“For the customer base, the addition of the two entities will give us a total of four million customers and most of these customers are coming with deposits that have been stable over a period of time and this will be adding value to Skye Bank.”
According to the GMD, Mainstreet is also a big player in terms of lending to agricultural sector and it will be better for Skye Bank to harness and reap from the opportunities in the agricultural sector as this, he said, would result to increased revenue for the bank.
Oguntayo said that Skye Bank had developed a roadmap on things it needed to do in order to have a seamless integration with Mainstreet Bank and that the Bank will not be in a haste to rationalise branches despite the integration .
“We have just taken over Mainstreet Bank and we don’t want to be in a haste to rationalise branches. “But there are some that are obvious. For instance, if we are located on this side of the road and Mainstreet Bank is also on same side of the road. Unless the two branches can justify their existence, it will be a waste of money running two branches and two operating expenses. You know in Nigeria every bank has two generators. So, those are costs that we would avoid.” He said.
Oguntayo, said that Skye Bank was set to deliver superior value and returns to shareholders as the bank enters its new strategic growth phase and that the bank would leverage the acquisition of Mainstreet Bank Limited to take its services closer to its current and prospective customers and expand its bouquet of value adding offerings to meet the diverse needs of its various stakeholders.
Mainstreet full acquisition and integration according to the bank will be completed by this month.
By subsuming Mainstreet, Analysts say Skye Bank would figure among the first four banks in the country. Rightly so because it would vault the number of branches to about 450 branches across the country.
When integration is complete, the consolidated bank should be able to configure competencies towards cost leadership, business optimisation, stronger profit and greater ability to offer business convenience to retail and commercial customers across all geographies, analysts say.
Oguntayo, said that in spite of the challenging operating environment, the Bank carefully grew its risk assets portfolio, attained a 15.7% growth in deposits, supported customers in critical and productive sectors of the economy, and declared a fairly decent profit.
Oguntayo assured those who have kept their investment with the bank, along with other stakeholders that the synergies and economies of scale expected from the Mainstreet acquisition will begin to manifest from the current financial year, while promising current and potential customers of consistent quality service on all electronic platforms and in the business locations.