The financial results of Polaris Bank of Nigeria for the year 2019 are highly impressive.
The Polaris Bank of Nigeria has released its 2019 financial results after securing the approval of the Central Bank of Nigeria (CBN) to its Annual Financial Statements for its first full financial year of operation.
By all objective standards, the results are impressive especially given the legacy constraints under which the institution was birthed.
The Annual Financial Statements ending December 31, 2019 show gross earnings of over N150billion, Profit before Tax of N27.83billion and Profit after Tax of N27.35billion showing very strong profitability and profit potential going forward.
The bank’s deposits from customers was N857.8billion with Total Assets in excess of N1.14Trillion confirming that Polaris Bank remains a systemically important bank within the Nigerian financial system.
The bank’s capital is multiples of the regulatory minimum of N25billion at N82.9billion with a Capital Adequacy Ratio of 14% providing sufficient capital buffers to customers and other counterparties.
Apart from strong capital adequacy, the bank’s other ratios are equally impressive- Return on Assets (ROA) at 2%, Return on Equity (ROE) is 33%, Return on Sales (ROS) is 18%, and Liquidity Ratio at 81%.
These ratios demonstrate operating efficiency, strong inherent capacity for profitability and returns to stakeholders, very comfortable liquidity and asset efficiency.
The bank’s Cost to Income ratio of 59% is well in line with industry averages and further reinforces the institution’s underlying reality of operational and cost efficiencies, which is a significant achievement in view of its legacy constraints.
One remaining legacy challenge, perhaps understandably, is that the bank’s Non- Performing Loans Ratio (NPL) is 46%. Even though the management has brought this ratio down to this level from around 80% at the time of the regulatory intervention, it is evident that the work of the management of Polaris Bank to clean up its inherited loan portfolio must continue until NPLs are within acceptable
In Review of Polaris Bank Financial Results for 2019
Our key conclusions suggest four main themes emerge from Polaris Bank’s first year performance. In our view these themes are overwhelmingly positive:-
1. The financial performance of Polaris Bank in its first full financial year is impressive and the bank is stable, strong and competitive relative to leading Tier 1 and Tier 2 banks.
2. The Board and Management of Polaris Bank has successfully repositioned a previously troubled bank and created a new, thriving, forward-thinking bank
3. The bank has largely overcome its legacy challenges and constraints and is now very well positioned to compete in the Nigerian Financial Services Industry
4. The Management of Polaris Bank in concert with regulators seeks to assure a sustainable future for the bank and its customers leveraging technology, digital transformation and innovation in the context of a retail banking strategy
Report by RTC Advisory Services Ltd, Lagos.
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