Newly appointed Chief Executive Officers (CEOs) of four banks – Access, Fidelity, Zenith and Skye – are up against enormous challenges following the sterilisation of about N2 trillion public sector and private sector deposits by the Central Bank of Nigeria (CBN).
The CEOs have to work hard to sustain liquidity ratio above industry average and also sustain profit growth.
After Godwin Emefiele was appointed CBN Governor, Peter Amangbo became Zenith Bank Managing Director (MD), the third since the inception of the bank 24 years ago.
Herbert Wigwe has taken over as Access Bank MD/CEO from Aigboje Aig-Imoukhuede, and Nnamdi Okonkwo has succeeded Reginald Ihejiahi as Fidelity Bank MD/CEO
In Skye Bank, Timothy Oguntayo will succeed MD/CEO Kehinde Durosinmi- Etti who retires on July 31.
These seasoned bankers are presiding over the banks at a time when the CBN is eliminating commission on turn over (CoT), a major source of cheap income for banks.
Emefiele has also announced plans to suspend other charges that are source of income for banks, besides plans for a reduction in interest rate.
Interest rate reduction implies that banks’ trading in high yield fixed income instruments like bonds and treasury bills may soon become less attractive.
The N812.4 billion combined gross earnings of the four banks in 2013 needs to be sustained by the new helmsmen, if not surpassed, despite a tough operating environment.
Together, they will oversee N7.16 trillion banking assets and N5.402 trillion deposits, which represent 35 per cent of deposits in all banks in 2013.
In 2013, Zenith Bank posted N110.59 billion profit before tax (PBT), N509.3 billion shareholders’ funds, and N2.27 trillion deposits.
Its total assets totalled N3.14 trillion and gross earnings N351.4 billion. The eyes of stakeholders are keenly on these figures and would take nothing less than growth from Amangbo.
Skye Bank recorded N17.13 billion profit before tax in 2013 and N996 billion deposits. Oguntayo, like every other CEO, has to refuse the temptation of using short term deposits to fund long term projects.
Stakeholders are anxious to see the bank improve on these numbers on a sustainable basis.
Analysts and industry experts are keen to see how these CEOs will explore the huge Nigerian market to deliver good returns to stakeholders despite tough regulation.
While the new CEOs are expected to grow the deposit of their banks, they will also face the challenge of deploying these deposits in an efficient manner that enhances net interest income and minimises bad loans.
The new management in Fidelity Bank is aware of the challenge.
In a conference call with investors, it promised to reduce costs by “continuous downward re-pricing of costly term deposits, which is under way; increasing the proportion of staff in market-facing roles while rewarding them appropriately; and, to a lesser extent, increasing branch footprint (e-branches mainly) to increase market reach.”
Overall, Fidelity Bank said it would drive e-banking products for customer mobilisation and service, and that mergers and acquisition deals could happen with the right target and price.
Renaissance Capital (RenCap) observed that Fidelity Bank is trying to focus on small and medium-scale enterprises (SMEs), and coupled with its payroll lending retail book, wants combined exposure to rise to 50 per cent over the medium term (2017), from 28 per cent in 2013.
According to RenCap, the bank has also been re-pricing the existing loan book and plans a periodic review all concessions and lending rates.
Shareholders of Access Bank are aware that their fund has been on a steady increase since 2011 and expect nothing less going forward. In 2011, it was N192.1 billion, 2012 (N241.2 billion) and 2013 (N244.4 billion).
The bank grew loan book by 33 per cent last year, and depositors do not want to hear unpleasant stories about their N1.33 trillion deposits.
