The Sun News On-line | Business news

Bank PHB’s earnings for the third quarter ending March 31, 2008 shows a strong 167 percent growth in gross earnings to N55.18 billion compared to N20.71 billion in March 2007. Also the Bank , as it has consistently done in previous quarterly and annual results released, grew its profit before tax at a higher pace than its earnings, showing that the bank’s strong earnings is driven by strong efficiency gains in its operations as well as increasing customer confidence.

Profit before tax for the period under review stood at N19.03 billion which is 229 percent higher than the N5.79 billion profit before tax for the corresponding period of March 2007. The bank’s profit after tax stood at N14.85 billion, a similar 229 percent growth on its profit after tax of N4.51 billion in March 2007.

But analysts looking at the result note that the bank’s profit margins has significantly shot up reflecting a sharp increase in earnings and significant drop in costs.
Pre tax profit margin for third quarter 2008 stood at 34.5 percent compared to 28 percent in third quarter of 2007 showing the bank is making an average of N35 profit per N100 earned, about N7.00 higher that the N28 profit per N100 made in the same period in 2007. Also net profit margin for third quarter 2008 stood at 26.91 percent compared to 22 percent in third quarter 2007.
This reinforces the bank’s position as having one of the lowest cost-to-income ratio in the banking industry.

The percentage growth rates shown in Bank PHB’s 3rd quarter interim results showed it was maintaining its above industry average growth rate.
Analysis of the bank’s financials last year had shown it growing its earnings and profits at about three times the average growth rate of the Nigerian banking industry.
A statement from the bank states that the board of directors were confident that barring any unforeseen circumstances, this performance would be tremendously surpassed in the remaining period of the financial year.

Interim results already show it was certain to surpass its forecast profit before and after tax figures for 2008 as contained in its offer prospectus when it approached the capital market with an N85 billion initial public offer.
In the prospectus to the offer, the bank had forecast a profit before tax of N21 billion and profit after tax of N16 billion. The bank nine month profit before and after tax are just about N2 billion shy of these forecasts showing the bank was set to significantly surpass the forecasts. The IPO results released recently show the offer was 269 percent subscribed.

Already, investors who bought the bank IPO at N17 per share in November 2007 are feeling good about their investment as the bank share price has consistently sold at an average price of N30 per share since the offer closed in December 2007, representing a potential capital gain of 76 per cent.
The bank latest financial result is expected to boost its price further even as some financial analysts project the bank share price to hit N40 per share by the close of its current financial year in June.

Close observers of the Nigerian banking industry say Bank PHB is thriving on an innovative product suit and creative branding which combined is bringing in customers while driving up earnings. The bank ability to bring in strong efficiencies into its operations is helping convert these increasing earnings into profits say analysts.