By Olanrewaju Oyedeji
African subsidiaries of Nigerian banks have contributed very little to the bottom-lines of their parent companies. The Difference’s review of their 2015 financial results has shown that many of the African outlets have been little more than average performers as their revenues have rarely risen above ten per cent of group total.
Matters have been made worse by the fact that while the operating costs of these subsidiaries have been on the rise, operating revenues have continued to either dip or remain relatively stagnant.
One of such banks, Access Bank for example, achieved a revenue of N337.4 billion in 2015, with 8.6 per cent or N28.9 billion coming from its African subsidiaries.
This is a N75.4 million decline from N28.9 billion revenue posted by the bank’s African subsidiaries in 2014.
The bank’s Nigerian operations contributed a stout N302.1 billion or 89.5 per cent of its total revenue in 2015, while its European subsidiaries hauled in N6.45 billion, instead of the N206.9 billion and N9.35 billion achieved respectively in 2014.
The bank’s foreign operations’ performance were less impressive in 2015 as revenue from Forex fell by over N1 billion.
Consequently, of Access Bank’s N75 billion profit before tax (PBT) in 2015, its Nigerian operations contributed 86.8 per cent, while it African and European subsidiaries raked 9.7 per cent (N7.3 billion) and 3.5 per cent (N2.6 billion) respectively in the year under reviews.
On its part, of the N105.8 billion profit after tax (PAT) of Zenith Bank Plc, one of the first-tier banks of the Africa’s largest economy, its African subsidiaries contributed 6.81 per cent, amounting to N7.2billion.
The parent bank contributed a whopping N96.2 billion, which is 90.9 per cent of the 2015 net profit, while its European operations added just N2.4 billion.
The bank got just N26.6 billion or 6.42 per cent of its total revenue of N415 billion in 2015 from its African subsidiaries, while the bank in Nigeria and Europe raked up N377.7 billion and N10.6 billion respectively.
Overall however, despite an economic crunch caused by falling crude oil prices and slow, if not tardy governmental responses in its parent base, Nigeria, the bank saw its gross earnings grow by 7.24 per cent to N432.5 billion in 2015 from N403.3 billion.
For United Bank for Africa (UBA) another first-tier Nigerian bank, of the N314.8 billion revenue it made in 2015, just N67.7 billion about 21.5 per cent came from its African subsidiaries, indicating that the bank has a strong footing on a broad continental basis.
While N248.1 billion was earned in Nigeria in 2015, a paltry N6 billion came in from the bank’s European operations.
In the year under consideration, UBA made a net profit of N59.7 billion, which represents a 25.5 per cent increase from the N47.9 billion it made in 2014.
The bank’s African operations contributed N14.1 billion to its 2015 PAT, a 28.6 per cent rise from the N11 billion it scooped up the previous year.
UBA which is one of the few banks that posted impressive results in 2015, made N41.7 billion which is 80.7 per cent of its net profit from Nigeria, while its European subsidiaries contributed N2 billion, in contrast to the N1.1 billion made in 2014.
Mr Kayode Tinuoye, Team Leader, Research, United Captial Plc, a sister company of UBA, attributed the declining contribution of African subsidiaries to the profit of Nigerian banks to the global falling commodity prices, which are the main revenue earner for most sub-sharia African region.
According to him, the falling prices of commodities like crude oil, platinum, cocoa etc has put a lot of pressure on most African countries that depend heavily on them for their foreign exchange.