Growing Beyond Expectation
By
Sunday, February 11, 2007
The various strategies adopted by Oceanic Bank International PLC to penetrate the market have contributed greatly to its phenomenal growth
By Dapo Ajibola
Before the banking sector reforms, not many Nigerians gave Oceanic Bank International PLC any chance of surviving. But contrary to that expectation, Oceanic Bank did not only survive the reform, but has grown to be one of the leading banks in Nigeria and beyond today.
The market penetration strategy of the bank is said to be responsible for its phenomenal growth. The company's first quarter results as December 31, 2006, have re-affirmed the bank's determination and ability to take the leadership position in the banking sector.
The result showed a 45.18 percent increase in gross earnings to N12.5 billion, compared with N8.6 billion of the same period in 2005. Similarly, profit before and after tax equally grew by 46.43 percent and 45.73 percent to N4.1 billion and N3.4 billion respectively from N2.8 billion and N2.3 billion recorded for the same period in 2005 respectively. Per share earnings for the period improved by 45.73 percent to N0.37 billion from N 0.25billion.
In 2006, the company recorded a gross earnings of N44.7 billion, a growth of N84 percent over the N24.3 billion earnings for 2005. The bank's profit before tax grew by 58.9 percent to N11.6 billion as against N7.3 billion of the preceding year. Its profit after tax, also increased by 62.7 percent to N9.6 billion at the close the year as against N5.9 billion recorded in 2005.
From N281.2 billion, the bank asset base and contingent liabilities grew to N466.5 billion, a growth of 65.9 percent. Deposits in the bank for the period under review also grew to N310.33 billion, an 85.3 percent increase over N167.5 billion in 2005. The disproportionate growth in equity resources relative to balance sheet size and loan assets constrained the capital adequacy position of the bank, although, it still assures of safety.
However, the proportion of equity funds to total assets dropped from 14 percent in 2005 to 10 percent in 2006 while equity/loans and advances ratio also dropped to 38 percent in 2006 as against 40 percent in 2005. Gross loans and advances rose by 33 percent in 2006 to N105.83 billion compared with N79.81.billion in 2005. The bank's loan loss provision is a negligible proportion of its operating income, loaning at ratio of 00.5:1, implying that the bank's loan loss provision is just about five kobo in every N1.00.
Meanwhile, Cecilia Ibru, chief executive of the bank, has attributed the company's ability to sustain its remarkable performance on all financial indices to its solid management, continuous quest for innovations and human capital development all geared towards value-added customer service delivery. From its efforts, the bank has been able to consistently improve on its earnings' generation capacity, rising by 479 percent between 2002 and 2006.
The bank's profitability also rose sharply by 272 percent during the same period, a fact that ensured the generousity of rewarding its shareholders with a 31 percent annual growth market price as of February 2, 2007 was N16.95 per share in dividend and a five-year dividend growth of 854 percent (84 kobo per share in 2006). Market price at February 2, 2007 was N16.95 per share.
Oceanic Bank International PLC was incorporated on March 26, 1990, and licensed as a private limited liability company on April 10, 1990. The bank commenced business on June 12, 1990. It became a public liability company on March 4, 2004 and was listed on the Nigerian Stock Exchange, NSE, by way of introduction on June 25, 2004.
Within it years of operations, the bank has grown to effectively become one of the big five in the country. With its recent partnership with Commerce Bank of Germany, the bank is qualified to join few others in managing the country's over $36 billion external reserves. Market analysts have lauded the bank's post-consolidation performance in judiciously utilising its huge resources to post good results, a strong indication of better returns for investors.
A very significant strategy of the bank, which market analysts have greatly commended, is the bank's determination to further open its revenue base by establishing so many subsidiaries. There are Oceanic Registrars Limited, Oceanic Trustees Limited, Oceanic Custodian Limited, Oceanic Insurance Limited, Oceanic Mortgages Limited, Oceanic Securities Limited and Oceanic Management.
The subsidiaries have made the company a sort of Financial supermarket adequately and officially positioned towards meeting its customers' needs. It is expected that the bank's current expansion and retail banking initiatives would enable it access to cheaper funds and more business opportunities.
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