Following their aggressive expansion into other African countries, Europe, and Asia, the subsidiaries of United Bank for Africa Plc (UBA), Access Bank Plc, Zenith Bank Plc and Guaranty Trust Bank Plc (GTBank) raked in about 29.5 per cent of their combined profit before tax in their 2021 financial year ended December 31, 2021, from their foreign subsidiaries, compared with the 23.3 per cent contribution to profit before tax recorded by the four banks in their 2020 audited financial statement.
According to data compiled by THISDAY, in terms of value, the four banks’ foreign subsidiaries generated N245.47 billion, which was an increase by 43 per cent, compared with the N171.83 billion recorded in 2020.
Data gathered from the banks’ audited financial statements revealed that UBA, with presence in 20 African countries, a pension custodian subsidiary and branch in United Kingdom generated earnings from its foreign subsidiaries in 2021.
UBA’s subsidiaries generated profit before tax of N100.23 billion in 2021, up from N71.57 billion in 2020, while Access Bank with subsidiaries in Gambia. Sierra Leone, Zambia, UK, Ghana, Rwanda, D.R.Congo, Guinea, Mozambique, South Africa, Kenya and Botswana generated N67.7 billion profit before tax in 2021, from N35,73billion in 2020.
In the same vein, the foreign subsidiaries of GTBank with subsidiaries in Ghana, Sierra Leone, Liberia. Gambia, Cote D’Ivoire, Kenya Group, Tanzania and UK generated profit before tax of N45.4billion in 2021, higher than N22.96 billion in 2020.
The contribution of the foreign subsidiaries to the Group performance of GTCO revealed significant contribution from the West African countries.
Also, the subsidiaries of Zenith Bank’s subsidiaries in Africa, Europe, Dubai and China generated N32.17 billion profit before tax in 2021, up from N41.56 billion in 2020. Zenith Bank, which is the most profitable bank in Nigeria had reported N280.37 billion profit before tax in 2021 from N255.86 billion in 2020, with Nigeria contributing about 94.8 per cent or N265.91 billion in 2021, up from 85.32 per cent or N218.3billion in 2020.
Zenith Bank had also revealed that its foreign subsidiaries contributed 12 per cent of its total revenue in 2021, from 13.9 per cent in 2020, while Nigeria contributed 88 per cent in 2021 from 86.1 per cent in 2020.
However, except for Access Bank that reported significant increase in profit before tax in 2021 from its United Kingdom subsidiary, three other banks struggled in the UK.
Specifically, Access Bank in 2021 reported N22.63 billion profit before tax in 2021 from N7.27 billion in 2020, from its UK subsidiary, while GTBank UK reported a loss of N1.16 billion in 2021 from a loss of N1.62 billion in 2020. Also, Zenith Bank UK’s profit before tax dropped to N4.93 billion in 2021 from N7.6 billion in 2020, while UBA UK Limited reported a loss of N428 million in 2021 from N1.41billion reported in 2020.
Speaking to analysts and investors on the group performance in 2021, recently, the Group Managing Director, Access Bank, Mr. Herbert Wigwe, revealed that in 2021, the growth in its subsidiaries have continued to grow.
According to him, “Subsidiaries’ contribution to the group’s profit before tax performance stood at 38 per cent compared to 28 per cent in the corresponding period last year, and of course recording total subsidiary PBT of about N67.7 billion compared to N35.7 billion it contributed in the same period of last year.
“Most of the subsidiaries recorded a decline in their cost to income ratios, reflecting the impact of our effective cost management across the group including Guinea and South Africa, Botswana as well.
“These three countries had their first three months of operations, hence the high cost operating ratio that you probably see in Guinea, South Africa and Botswana. But for all the others they have brought the costs down.”
Wigwe noted that the transition into a holdings company was expected to play four key roles to deliver on the management objectives.
Commenting on banks’ expansions drive, the Vice President, Highcap Securities, Mr. David Adnori said banking with subsidiaries in Africa and Europe brings balance and improved corporate earnings, which he said was a win-win for shareholders and the economy where the banks have presence.
Culled from THISDAY