Oceanic Bank’s restated 2008 financials signal fresh outlook
Oceanic Bank plc on Tuesday released its audited 2008 and 2009 results alongside audited quarter-one (Q1) 2010 financials which showed a return from the red to black. After posting losses for 2008 and 2009, the bank reported a profit before tax (PBT) of N1.73 billion for the first quarter of 2010. Its result came approximately nine months after the Central Bank of Nigeria (CBN) intervention of August 14, 2009.
However, a major attraction in the statement to the Nigerian Stock Exchange (NSE) was the restatement of the bank’s audited figures for 2008 financial year, which not only signal flaws on the side of auditors of the bank, but also meant that the corporate action that was announced by the board has been finally laid to rest. Stock market analysts believe that with the restatement of 2008 audited result of the bank, the implication now is that the bonus of 1 for 10 announced by the board and former management remained jettisoned as indicated by the CBN governor, following the takeover of the bank in August 2009.
It then means that investors should start thinking of a new era of investment decision in the bank as it has now returned to profitability. Oceanic Bank announced the restated audited 2008 results for the group as well as its financial performance for the year ended December 31, 2009.
“Restatement of the Group’s financial statements for the 15 months to December 31, 2008 adjusted downwards by N71.2 billion and N349.5 billion the previously reported gross earnings and profit before tax, respectively. “The Group’s restated loss after tax for 2008 stands at N234.7billion compared to previously reported profit after tax of N9.6 billion. Group’s non-performing loans have been restated at N443.3 billion or 51 percent of total loans and advances compared to previously reported N54.5 billion and 8.6 percent, respectively, as at December 31, 2008,” the bank stated.
Oyinkan Adewale, the bank’s executive director / chief financial officer, said, “The current management team, which resumed in August 2009, evaluated the appropriateness of the bank’s prior accounting and reporting decisions. We conducted an extensive review of the 2008 results, and, with the concurrence of the Board, came to the conclusion that it was best to restate the 2008 accounts to give a true and fair view of the bank’s condition as at 31st December 2008. The thoroughness of the reviews gives us the confidence that the audited restated accounts adequately address the misrepresentations in the previously reported 2008 results. Going forward, our business and investment partners and all other stakeholders can rest assured of the quality and integrity of reported numbers.”
John Aboh, group managing director/chief executive officer, in a statement at the release of the result, noted that the results were indicative of growing customer confidence, loyalty, and a vindication of the effectiveness of the recovery strategy put in place by the new management to reposition the bank.
“After overcoming the initial challenges of stabilising the bank and restoring customer confidence, we launched a recovery plan that focused on good corporate governance, low-cost liability generation, cost optimisation, and improved risk management. The plan is yielding the desired results and the bank is looking ahead to a brighter future,” Aboh said.
The bank/group’s financials in focus The bank recorded gross earnings of N28.7 billion and profit before taxation of N1.73 billion while the group recorded N30.4 billion and N2.56 billion, respectively, in its unaudited results for the quarter ended March 31, 2010.
The first quarter 2010 profit, coming after the loss of N89 billion posted in 2009, effectively signals the bank’s return to profitability after the CBN intervention in August 2009. Other highlights of the bank’s results include increase in net interest margin of 26.3 percent in first quarter 2010 as against 14.5 percent in first quarter 2009; operating expenses went down by 13 percent from N18.7 billion in first quarter 2009 to N16.24 billion in first quarter 2010 and profit after tax of N1.12 billion compared to loss after tax of N12.5 billion in first quarter 2009.
The bank’s balance sheet witnessed a 2.5 percent increase in total assets from N869.3 billion at December 31, 2009 to N890.1billion at the end of first quarter 2010 and nine percent growth in Customer Deposits in first quarter 2010 to close at N595.3 billion. Earnings per share for the quarter stood at 5kobo in 2010 compared to a loss per share of 56kobo in quarter 2009.
For the 2009 financial year, the Group’s Gross Earnings rose by 66 percent from N118.3 billion in 2008 to N196.4 billion, while Net Interest Income rose sharply from N7.5 billion to N101.0 billion, largely due to the release of previously suspended interest income on hitherto non-performing loans which have been restructured and are now performing.
Operating Income increased significantly by 166 percent from N45.6 billion to N121.5 billion spurred by the rise in interest income. The Group’s cost to income ratio improved significantly from 195 percent in 2008 to 81 percent.
Non-performing loans rose by 43 percent from N443.3 billion at the end of 2008 to N634.0 billion as at 31st December 31, 2009; and non-performing loan ratio grew from 51 percent to 72 percent, indicating the determination of the bank’s management and board to classify and provide for all loans correctly in line with Prudential Guidelines and international standards.
Iheanyi Nwachukwu
BUSINESSDAYTHURSDAY, June 24, 2010