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Banks are grappling with a low yield environment as evidenced in dwindling revenue, but most of them recorded profit growth, thanks to a reduction in impairments of financial asset, income from fees and commission income.
Amid these challenges, some lenders have utilized the resources of their owners in generating higher profit, which means there has been an increase in return on average equity (ROAE). The higher the ratio the better, because it means a firm is profitable and efficient.
Access Bank and Guaranty Trust Bank exhibit stronger ROAE than peers.
For instance, GTBank’s ROAE of 32.15 percent- higher than 16.15 percent industry average- is higher than the 29.17 percent recorded during the previous year. An ROAE of 32.50 implies N0.325 returned on every $1 invested, so the higher the returns the better.
The marriage between Access Bank and Diamond Bank was a boon for the Access Bank as ROAE moved to 30.85 percent in March 2019 from 17.58 percent as at March 2018. The lender recorded the fastest ROAE expansion among peers, driving the 2019 figure above the industry average.
Zenith BanK and Stanbic IBTC Holdings Plc have consistently distinguished themselves among the midsized banks as it continues to remain efficient. Its ROAE of 30.47 percent, although lower than 43.43 recorded in the corresponding period of last year, is above the industry average of 16.13 percent.
United Bank for Africa (UBA)’s ROAE moved to 21.92 percent in March 2019 from 18.40 percent the previous year; an ROAE of 0.2192 percent implies N0.2192 returned on every N1.
Interestingly, First Bank Holdings’ 11.76 percent ROAE is below industry average, but the ratio increased from 9.72 percent recorded the previous year as the lender surmounted brought on by the sudden drop in crude oil price that stoked poor … Read More...