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A growing retail profile, improving customer experience and nimble technology are driving Polaris Bank Limited through its transitions. Despite the COVID-19 pandemic and management transition, the bank sustained positive growth trajectory for the second consecutive year. Deputy Group Business Editor, Taofik Salako, examines underlying strength and outlook of the bank.
Two broad indices are deposits-size and structure, and complaint resolution. Latest audit of Polaris Bank Limited underscored a major transition of the bank as one of the fastest-growing and customer-centric financial institutions. The audit, for the year ended December 31, 2020, with Pricewaterhouse Coopers as independent external auditors, showed stable earnings underpinned by robust growth in deposits and improved customer experience.
A breakdown of the complaints management during the period showed that 99 per cent of total complaints were resolved internally during the period, with a negligible 15 cases or 0.26 per cent of the unresolved complaints escalated to the Central Bank of Nigeria (CBN).
Growth driven by value
Polaris Bank’s total assets rose to N1.19 trillion in 2020 as against N1.16 trillion recorded in 2019. While the paid up share capital remained unchanged at N25 billion, total equity funds rose by 15 per cent from N86.89 billion in 2019 to N99.94 billion in 2020. In a year impacted by lockdowns and disruptions, customer deposits increased by N56.43 billion from N857.89 billion in 2019 to N914.32 billion in 2020. The increase in deposit was driven predominantly by low-cost deposits.The bank also increased its gross loan book, reflecting its modest and prudent risk strategy to grow its portfolio of quality loans for optimal interest-income generation.
The report indicated a group pre-tax profit of N22.21 billion in 2020 as against N27.34 billion in 2019. Net profit meanwhile rose from N26.29 billion to N28.09 billion. Gross earnings stood at N129.31 billion in 2020 as against N150.85 billion in 2019.
Interest income had closed 2020 at N108.50 billion as against N133.61 billion in 2019. The bank however halved interest expenses from N45.81 billion in 2019 to N23.13 billion in 2020. This steadied net interest income to N85.37 billion in 2020 compared with N87.80 billion in 2019.
A modest increase in operating expenses, four per cent, compared with double-digit inflation that ran through the year, and forward-looking decision to increase impairment charge by a third, moderated the pre-tax bottom-line. Compared with average industry performance, especially within its group of second tier banks, the top-line and bottom-line performance of Polaris Bank showed resilience and stronger surefootedness than most of its peers. Polaris Bank’s return on asset (RoA) and return on equity (RoE) of 2.4 per cent and 29.4 per cent also compete favourably within the industry.
Analysts’ review
Analysts at RTC Advisory Services Limited said the performance of the bank, when viewed in the context of COVID-19 lockdowns and the change in leadership during the year, underscored the depth of managerial capability and general buy-in within the bank and the sustainability of its growth model.
Former managing director of the bank, Mr Tokunbo Abiru, had resigned during the year to contest senatorial election, and was elected as a Senator. The board appointed Mr. Innocent Eke, the Executive Director, Technology and Services, as Acting Chief Executive.
Ike, a best-graduating fellow of the Institute of Chartered Accountants of Nigeria (ICAN), continued the implementation of the bank’s strategic growth plan, steering the bank to what analysts regarded as impressive results, against the background of the global and national macroeconomic environment and industry headwinds.
Analysts at RTC Advisory said last year’s results showed further consolidation in the bank’s performance, with focus on profitability, growth and value creation. According to analysts, the 2020 results confirmed that “profitability and growth may now be the trend, rather than a one-off performance”.
“Polaris Bank has some strong strategic attributes-strong liquidity, good relationship management, a vast branch network and is enhancing its brand and product offering to differentiate the bank and deepen its franchise,” RTC Advisory stated.
Citing underlying indices, analysts stated that Polaris Bank’s two-year performance underscored the relevance of the bank’s new corporate strategy, good corporate governance and management depth and cohesion.
Commending the board and management for their commitment to business ethics by upholding sound risk management practices, analysts said Polaris Bank’s performance in 2020 reflected “commendable improvements in key performance indicators, assuring a strong positive outlook for earnings, margins, and profitability improvement in its cautious pursuit of loan growth, a sustained strategy for operational efficiency, funding cost optimisation, and efficient deposit mix”.
Pundits noted that the headroom for loan creation presents an opportunity for improved margins noting that the bank might be poised for reap the benefits of its investments in technology and human capital in the new business year, despite the challenging macroeconomic environment.
“Polaris Bank is now strong and stable, with a sound strategic focus and technology, revitalised brand, people, products and services and technology; and has been placed on a sound foundation for the future,” RTC Advisory concluded after exhaustive review.
Management outlook
Ike, a certified International Financial Reporting Standard (IFRS) banker and honourary senior member of the Chartered Institute of Bankers of Nigeria (CIBN), is also confident about the outlook of the bank. With strong support from Muhammad Ahmad-led Board, Ike said weathering 2020 signposted the significant milestones the bank had achieved since its inception in September 21, 2018 when it started its journey.
According to him, the bank has since grown to earn the confidence of the banking publics, offering quality banking services at the cutting-edge of technology.
“2020 was arguably the most challenging year that the world has faced in decades owing to the negative impact of COVID-19 on businesses and the economy. Yet, the current resuwlt demonstrates the importance of the deployment of appropriate strategies, and effectively validates our recent investment in technology solutions and digitisation of our products and processes,” Ike said.
He explained that the bank’s subsisting three-year corporate transformation plan has recently been reviewed in line with the changing operating environment and trend dynamism for sustainable value creation.
He pointed out that digital transformation remains one of the potent strategies to strengthen the bank’s balance sheet, control costs, and improve processes while providing clients with wider self-service offerings.
Polaris Bank’s strategic plan is centered around convenience, accessibility, customer satisfaction, and empowerment. The bank is creating a niche for creating opportunities for youths, small and medium enterprises, women entrepreneurs and other underserved groups. With a retail-led digital strategy, the bank seeks to be the bank of first choice for discerning customers, who value and trust its sustainable approach to business and the environment.
Deepening savings
Polaris Bank at the weekend rounded off a multi-million naira savings campaign aimed at fostering savings culture, in light with the national financial inclusion agenda and CBN-led industry agreement. A total of 188 Nigerians received N26 million during the bank’s ‘Save & Win’ nationwide campaign. Eight millionaires emerged from the six geo-political zones of the country while 180 other customers went home with a consolation sum of N100,000 each.
Six millionaires who emerged at the grand finale draw at the weekend included Williams Atinuke, a customer of Ikorodu Local Govt branch; Bello Amthe, a customer of Maiduguri branch; Sani Mohammed, a customer of Kura branch, Kano; Okoro Arua, a customer of Aba Factory Road branch, Abia State; Ndidi Ebagua, a customer of Benin Main branch, Edo State and Ogunbowale Isola, a customer of Sokenu Road branch, Abeokuta, Ogun State.
Two millionaires – Lucky Okunzuwa, a customer with the bank’s Akpakpava branch in Benin City, Edo State and Ikechukwu Obiefuna, a customer with the bank’s Okeke street branch, Awka, the Anambra State capital, had earlier emerged in the first and second draws of the promo, which took place on February 9 and March 9.
Supervised by the Federal Competition and Consumer Protection Commission (FCCPC); National Lottery Regulatory Commission (NLRC) and the Advertising Practitioners Council of Nigeria (APCON), the savings campaign and reward process were adjudged as transparent and credible, further bolstering the ethical image of the bank.
Ike, congratulating the winners, said the bank’s aim is to foster savings culture with a view to enhancing wealth creation and distribution.
“This will create the desired change in the savings culture of Nigerians as well as transform the investment climate for the economy,” Ike said.
With a highly experienced board and resourceful management, most pundits share the bank’s optimistic outlook. There are more reasons to support the positive outlook of the bank, despite transitional risks and the tough macroeconomic environment.
Culled from The Nation