Afribank's Balance Sheet Growth
 3rd OCT 2006

Afribank Nigeria Plc has announced a balance sheet value of N131.27 billion for the financial year ended March 31, 2006. This represents an increase of 37 per cent from N95.75 billion in 2005.

The bank’s latest 2006 results revealed an increase of 17.29 per cent in the Gross Earnings from N12.49billion in 2005 to N14.65 billion in 2006. It posted N3.70 billion Profit Before Exceptional Item and Taxation as against N530.50million in the previous year, representing a huge 596.47 per cent. Management of the Bank stated that the sharp rise in Profit Before Tax (PBT) was largely made possible by efficient use of assets and cost effectiveness in the operations of the bank.

Net interest earning ratio grew to 75 per cent from 72 per cent. This shows that the bank’s risk asset managers were relatively more efficient in 2006.

The 2006 financial results of the bank shows that Non-performing loans was 24 per cent declining from 32 per cent. Interest earnings accounted for about 71 per cent.

This strategy impacted positively on the bank’s bottom line because of the efficiency in the Bank’s management of its risk assets.

Earnings per share increased substantially from 5 Kobo in 2005 to 52Kobo in 2006, the best in the last 4 years. This underlies the quantum leap in performance.

In terms of liquidity, the bank recorded adjusted cash ratio of 48 per cent in 2006 as against 37 per cent in 2005.The adjusted liquidity ratio increased marginally from 22 per cent to 23 per cent. The implication of the adjusted liquidity ratio is that the bank’s specified liquid assets cover almost 73 per cent of volatile deposit liabilities.

Those specified liquid assets are cash and related items, deposits with banks, operating balances with CBN, treasury bills etc. At this level, it is adequate and over and above the specified liquidity ratio of 40 per cent. With this high level of liquidity, the Bank’s dependency on inter-bank reduced from 4 per cent in 2005 to 3 per cent in 2006.

On capital adequacy, the bank maintained a very good safety margin in its capital adequacy measures in 2006. Risk weighted assets ratio in 2006 was 39%. The implication is that the bank can prudently expand its risk asset base by more than three and half times without compromising the safety of counter parties. However, the level this year was below last year’s 47 per cent. This was because part of the bank’s safety net was used up to increase risk assets, which generated more profit for the bank. The Bank’s shareholders’ funds increased from N21 billion in 2005 to N27.059 billion.

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