Intercontinental Bank’s net profit hit N18bn Q3

Intercontinental Bank Plc appears set for another rousing year as the bank nearly tripled post-tax profit to push earnings per share into three digits in the first nine months of operations.
Interim report and accounts of the bank for the third quarter ended November 30, 2007 showed that net earnings leapfrogged by 178 per cent to N18.1 billion, indicating earnings per share of about 101 kobo. The bank had recorded a net profit of N10.12 billion in corresponding period of 2006.
The report showed gross earnings of N99.65 billion by November 2007, indicating an increase of 69 per cent on N59.11 billion recorded in comparable period of 2006.
Intercontinental Bank has maintained appreciable growth trend over the years. Audited report and accounts of the bank for the year ended February 28, 2007 showed that gross and net earnings doubled while the balance sheet rose by 91 per cent. Underlying fundamentals showed a more liquid, better capitalised, well-diversified and less risky bank as proportion of non-performing loan assets dropped to a low.
Earnings per share rose from N1.10 in 2006 to N1.38 in 2007, which enabled the bank to increase cash payout from 45 kobo in 2006 to 65 kobo in 2007.
Gross earnings rose by 113 per cent from N41.04 billion in 2006 to N87.36 billion in 2007. Interest income doubled to N51.7 billion in 2007 as against N25.8 billion in 2006 while non-interest income grew by 133 per cent from N15.3 billion in 2006 to N35.6 billion in 2007.

With interest expense at N17.22 billion in 2007 as against N8.35 billion in 2006, net interest income recorded 98 per cent growth to N34.51 billion in 2007 compared with N17.4 billion in 2006. Relatively higher interest expense shaved off a point on net interest margin at 67 per cent in 2007 compared with 68 per cent in 2006. Operating expense rose by 90 per cent from N22.33 billion in 2006 to N42.56 billion in 2007.

Earnings from associated companies also improved from N475.8 million in 2006 to N564.8 million in 2007. Group's pre-tax profit grew by 121 per cent to N22.64 billion in 2007 in contrast with N10.3 billion in 2006. After deductions for taxes, net earnings stood at N15.48 billion in 2007 as against N7.56 billion in 2006, representing an increase of 105 per cent.
Underlying performance indicators supported a positive profit outlook as pre-tax profit margin inched up to 26 per cent in 2007 as against 25 per cent in 2006 and 2005. Interest income/loans and advances ratio improved from 12 per cent in 2006 to 15.5 per cent in 2007 while operating expense relative to gross earnings dropped to 49 per cent in 2007 as against 54 per cent in 2006. Average contribution of each employee to the bottom-line improved from N2.1 million in 2006 to N3.3 billion in 2007. Non-interest income made up 41 per cent of gross earnings in 2007 as against 37per cent in 2006.