At mid-year, how are financial institutions on the continent reflecting the consequences of the health crisis on their results?

As the interim earnings season progresses, the extent of the Covid-19 crisis on companies is becoming clearer. And for the continent's banks, which were badly shaken in the first quarter, at the beginning of the crisis, this mid-term exercise is still perilous.

So, profitable or less profitable than in the first half of the previous year? And to what extent? What about profitability? Jeune Afrique is sifting through the African banking sector.

Double-digit growth

* First Bank of Nigeria

First Bank of Nigeria performed well in the first half of the year. Its profit after tax is up +56% year-on-year. It reaches 49.5 billion naira ($130 million). Revenues were down, however, with net banking income of N131.3 billion (-7.4%).

Two elements must be taken into consideration. First, the sale of 65% of FBN Holdings' shares in FBN Insurance to the South African insurer Sanlam became effective on 1 June, in the midst of the crisis. The cash generated by this operation reinforced the profits posted in the first half of the year and enabled the bank holding company to boost the bank's capital to the tune of N25 billion.

* Coris Bank

The banking group of Burkinabe entrepreneur Idrissa Nassa cites "the good performance of intermediation margins on customer and treasury activity, as well as the appreciable evolution of margins on commissions" to justify its results.

Its net banking income: up (+18.8%), to 32 billion CFA francs ($57 million) in the first half of the year.

Its net income: also up (+22%) at 30 June, to 16 billion CFA francs.

Relative stability

* Ecobank

West Africa's largest bank highlights its resilience to present its performance for the first six months of the year. "Our financial results for the period were encouraging, despite the adverse effects of exchange rates and Covid-19," commented Ade Ayeyemi, CEO of Ecobank.

Its net banking income: almost stable (-1%) at $770 million, compared to $775 million in the first half of 2019

Its net income: down (-22%) to $128 million, compared to $164 million a year earlier.

Its profitability (ROE) in the first half of 2020 reached 6.7%, compared to 9.1% a year earlier.

* BCP Group

Another financial institution that seems to have preserved profitability and profitability by mid-year, the Moroccan People's Central Bank (BCP) chaired by Mohamed Karim Mounir. And while the group's net income fell sharply, the integration at the end of last year of the former subsidiaries of the French BPCE in Africa played positively on its performance in the first half of 2020.

Its net banking income: up (+13.9%) to 10 billion dirhams, or nearly 1.1 billion dollars.

Its consolidated net profit: down -48.3% to 1,034 million dirhams ($113 million).

This sharp decline in profit partly reflects a very sharp increase in its cost of risk. It reached 3 billion dirhams in the first half of 2020, compared to 1.38 billion a year ago. "This increase is due to the integration of IFRS [accounting] provisions in anticipation of the impacts of the Covid-19 pandemic on the economy, as well as collection provisions for the group's customers in lockdown," explains Mohamed Karim Mounir's group.

* Bank of Africa (BOA)

It is also a certain stability, despite the coronavirus storm that marks the interim results of the former BMCE Bank, renamed at the end of 2019 Bank of Africa (BMCE Group), named after the institution it absorbed in 2008. The group controlled by Othman Benjelloun is present in thirteen African countries, as well as in Europe.

Its net banking income: stable at 7 billion dinars (761 million dollars) at June 30 for the group, against 3.6 billion (+3.4%) for the main subsidiary in Morocco.

It should be noted that its other financial indicators, apart from the level of deposits and loans to customers, were not presented for the first half of the year.

It should be noted that BOA Burkina, listed on the Regional Stock Exchange (BRVM) in Abidjan, recorded an appreciable increase in revenue in the 1st half (+12%) to 23.2 billion CFA francs, for a net result (+1.9%) of 9.3 billion.

Dizzying falls

On the side of English-speaking Africa, the first results published, whether in Nigeria with the rout of oil and that of the naira, or in South Africa, the declines in incomes are (overall) the strongest.

* Standard Bank Group

The South African heavyweight, driven by Sim Tshabalala, was able to limit the breakage due to its strong continental footprint. Six of its countries of establishment (Angola, Ghana, Kenya, Mozambique, Nigeria and Uganda) compensated for the sharp fall in the group's profits in the Rainbow Nation (+11% against -72% for Standard Bank South Africa).

Among the few indicators presented that are relevant to be compared to other banking groups, we therefore find: revenues down -7% to 61.5 billion rand ($3.56 billion), for a profit of 7.5 billion rand, down -44% compared to the first half of 2019. said increased to R11.3 billion, 2.7 times the level of the previous period (1st half of 2019), reflecting the environment and the difficult outlook," the group said. The ROE is 8.5% in the first half of the year (9.5% the previous year).

* Nedbank

South Africa's fifth-largest banking group in 2019 (in balance sheet total), Nedbank is also showing dizzying declines in some of these profitability indicators.

The group explains that it was affected in particular because of a "significant increase in asset impairments", "the impact of Covid-19", or "the negative revaluation of certain investments not yet made and affected by the fall in the markets". Its profit (headline earnings) fell sharply (-69%) to R2.1 billion. As for Nedbank's return on equity, it fell sharply to 4.8%, compared to 16.8% in the first half of 2019.

* Kenya Commercial Bank

In the east of the continent, Kenya's largest bank has a mixed balance sheet at the halfway point. While KCB has chosen, like many banks affected by the consequences of the pandemic, to sharply increase its provisions to cover the increase in its credit risk. Its after-tax profit fell -40% to 7.6 billion shillings ($71 million).

Most subsidiaries of the joshua Oigara-led banking group have maintained the minimum capital requirement ratios. However, the newly acquired subsidiary National Bank of Kenya is falling short of the rules. KCB plans to inject additional capital by the end of the year to bring its subsidiary into compliance.

* Equity Bank

The same echoed by Equity Bank, whose half-year profits fell by -24% to 9.1 billion shillings ($84 million) in the first six months of the year.

A result that James Mwangi, the CEO of the Kenyan group, attributes to the "15-fold increase in their provisions for loan losses as a result of the risks associated with the management and control of Covid-19, and economic shocks and disruptions to supply chains during the lockdown".