Remember the Parable of the Talents? The parable goes something like this:  A man decided to go on a long trip, so he called his servants and asked them to take care of his money. The man decided to give one servant five talents (let’s say that it’s about $5mn), to another he gave two talents ($2mn) and to the last servant he gave one talent ($1mn). The man left on his trip and the servants each did something with the money that they received.  After a nice long trip the master came back and wanted to know what his servants did with his money. The first man with the five talents said, “You trusted me with five talents ($5mn) and I made five more.”  He gave him $10mn!  Then the man with the two talents came and said, “You trusted me with two talents and I made two more!” Then the man who received the one talent told his master, “I know you work hard for your money, so I was afraid to lose any of it.  I decided to bury it and keep it safe.  Here is your one talent back.” The master was not impressed and said, “You lazy servant!” 

 The Master in this parable is analogous to the discerning shareholders looking for return on their investments in Markets, whereas the servants in this parable are the Management team of the various companies that portfolio managers decide to invest in, in their hunt for Alpha. The earnings season has come and gone and you are left wondering what companies really outdid themselves, what companies did okay in this tough macro environment and what companies did not come to the party at all.

 The approach I have decided to take is to see how the banks ranked across the various matrix – 1 being the best and 11 being the worst.

This is a layman’s approach so I decided to call it Understanding Nigerian Banks – Dummy’s guide for this Sales Man (Don’t Judge me)

After my exercise – see how the banks ranked using my cumulative points system

** Earnings means Gross Earnings

How profitable are your earnings

For the 1H reporting – one set of numbers that stood out for me was GTBank. They reported earnings of NGN214bn with PBT of NGN101bn. The next best reported number was Stanbic IBTC Holdings  with NGN97bn of earnings and PBT of NGN29bn. For GTBank,  Profitability was 47% of its headline numbers versus Stanbic IBTC Holding and Zenith Bank with 30% and 24% of their headline number.

Please click the below link to get more details.

Nigerian Banks Ranking