Jun 23, 2010 By Michael Eboh & Providence Obuh

                                                    

The recovery plan put in place by the management of Oceanic Bank International Plc has started yielding positive fruits, as the bank bounced bank to profitability, announcing a profit after tax of N1.12 billion in its first quarter financial performance.

 

 

This, according to its unaudited results for the first quarter ended, March 31, 2010, presented to the Nigerian Stock Exchange (NSE), Tuesday, was against a loss after tax of N11.54 billion recorded in the comparable period of 2009.The bank’s gross earnings appreciated by 3.48 per cent to N30.35 billion in the period under review, compared to N29.33 billion in the 2009, while it posted a profit before tax of N2.56 billion compared to a loss before tax of N14.83 billion in 2009.

 

 

According to the bank, the first quarter performance, coming on the heels of its N89 billion loss recorded in 2009, effectively signals the bank’s return to profitability after the Central Bank of Nigeria’s (CBN) intervention in August 2009.Managing Director of the bank, Mr. John Aboh said that the improvement in its financial performance was a reflection of growing customers’ confidence, loyalty and a vindication of the effectiveness of the recovery strategy adopted by the new management to reposition the bank following the intervention of the Central Bank of Nigeria (CBN).

 

 

He said, “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 noted that from a pre-intervention level of N528 billion (as at August 14, 2009), the bank’s deposits dropped initially to N490 billion by October 2009, and then grew by 21.5 per cent to N595 billion as at March 31, 2010.

 

 

He added that the bank’s cost optimization initiatives have effectively streamlined its expense profile, paving the way for sustained value creation and profitability.The Bank also 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 adjusts 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 N234.7 billion versus previously reported Profit After Tax of N9.6bn. Group Non-Performing Loans have been restated at N443.3 billion or 51 per cent of Total Loans & Advances versus previously reported N54.5 billion and 8.6 per cent respectively, as at 31st December 2008.

 

 

According to Oyinkan Adewale, the Bank’s Executive Director / Chief Financial Officer, “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.”

 

 

For the 2009 financial year, the Group’s Gross Earnings rose by 66 % 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 per cent 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 per cent in 2008 to 81 per cent.

 

 

Non-performing Loans rose by 43 per cent from N443.3 billion at the end of 2008 to N634.0 billion as at 31st December 2009; and Non-performing Loan Ratio grew from 51 per cent to 72 per cent, 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.