Polaris Bank Set for Record Profitability on improved Operating Efficiency

Polaris Bank is on course to deliver a record profitability performance with a combination of a steady business expansion, increasingly efficient credit risks and cost management. Kayode Tokede reports

Average profit on every transaction by Polaris Bank has increased by about four steps this year when compared to the previous year in a growth trajectory that underlines the success of new management’s strategic initiatives.

By August 2024, Polaris Bank, Nigeria’s leading digital commercial retail bank, has surpassed its previous full-year profit before tax by more than 28 per cent in the first eight months of this year.

Annualised, management accounts for the eight-month period ended August 31, 2024 showed that Polaris Bank would significantly surpass all key performance indicators recorded in the year ended December 31, 2023.

With average profit on every transaction four steps ahead of the previous year, the bottom-line performance underscored a steady improvement in the core banking business, despite the challenging operating environment.

Growing customers’ confidence, improved margins and a strong performance in the core banking business over the past eight months signal that Polaris Bank could be on the way to a momentous performance in 2024.

The overall impressive outlook of the bank lent credence to the growing confidence and success of the new management of the bank, under the leadership of Mr. Kayode Lawal.

Pre-tax profit margin for the eight-month period ended August 2024 stood at 10.62 per cent as against 6.61 per cent recorded for the full-year 2023, an increase of about four percentage points. Net interest income margin stood at about 52.6 per cent in August 2024 as against 52.1 per cent in December 2023. Pre-tax return on total assets for the eight-month period rose to 1.22 per cent as against 0.63 per cent recorded in full-year 2023. Pre-tax return on equity stood at 21.44 per cent in August 2024 compared with 13.15 per cent in December 2023.

At N16.733 billion in the first eight months of this year, profit before tax was 28.4 per cent ahead of the N13.033 billion recorded in full-year 2023. The bank had recorded net profit of N10.91 billion in 2023.  

Key extracts of the management accounts and report for the period ended August 2024 indicated gross earnings of N157.59 billion, with interest income at N137.15 billion. Net interest income stood at N72.18 billion. Non-interest income closed at N20.44 billion while net operating income stood at N78.17 billion.

With total operating expenses at N61.43 billion, pre-tax profit surged to N16.733 billion, setting up the bank for its highest profit performance in recent years.

Key balance sheet items also underscored growing brand adoption and business penetration, with the bank continuing its tradition as a bank-to-go-to for small and medium enterprises. Customers’ deposits closed at N1.663 trillion. Total equity has surpassed full-year performance at N115.86 billion in August 2024 as against N99.13 billion for full-year 2023. Total assets is also already ahead of the previous full-year performance, at N2.060 trillion by August 2024 as against N2.058 trillion recorded by the end of 2023. 

Managing Director, Polaris Bank, Mr. Kayode Lawal, said the results evidenced the early successes of the ongoing strategic initiatives aimed at strengthening the bank’s overall position in the banking industry.

According to him, Polaris Bank is positioned to sustain its upwardly growth trajectory while remaining focused on its people-centric principles.

“We are in stronger position now to steadily build on the early gains and deliver exceptional value to our stakeholders,” Lawal said.

He pointed out that increasing brand penetration shows that discerning banking public continues to trust Polaris Bank as a safe haven for their deposits and a reliable partner for their businesses.

Audited report and accounts for the year ended December 31, 2023 had shown gross earnings of N197.04 billion with interest income of N144.68 billion and net non-interest income of N44.9 billion. Non-interest income was boosted by net trading and unrealized foreign exchange (forex) income, which stood at N32.24 billion during the year. Operating income stood at N97.19 billion. With operating expenses at N84.15 billion, pre-tax profit closed at N13.033 billion. After taxes, net profit stood at N10.91 billion, implying earnings per share of 44 kobo.

A review of the loan disbursements during the first eight months of the year showed an uptick, with the bank continuing a strong focus on small and medium enterprises (SMEs). The loan portfolio continues to reaffirm the brand essence of Polaris Bank, impact-focused banking that prioritises retail banking, SMEs, equal opportunity, youth, healthcare, education, family and environment among others.

A member of the United Nations Environment Programme Finance Initiative (UNEP FI), Polaris Bank sees its business as not only a sustainable profitable entity but also as a social intervention to help humanity, starting from Nigerians, to achieve self-satisfaction and safety. The UNEP FI seeks to engage the private sector and the global financial sector to help create a financial sector that serves people and the planet while delivering positive impact.

About N60 billion has so far been disbursed in new loans to SMEs over the past eight months while about N17 billion was disbursed under personal loans. Instructively, in a period of macroeconomic headwinds, the bank has remained supportive of small and medium enterpreneurs. Invoice financing totaled N22.17 billion by August 2024, already ahead of N21.12 billion disbursed for full year 2023. Business loans were up to N23.8 billion by August 2024, on course to surpass N35.21 billion disbursed for the whole of 2023.

The bank continues to provide supports across all key social impact lines of education, health and environment. A bit expository of the structural components of the loans underlines how Polaris Bank has been a major enabler for Nigerian businesses and households. Under its cash flow-lending product for SMEs known as Polaris Business Loan, the bank offers existing and new SME customers opportunity to access quick loans for stock replacement, equipment finance, working capital and business expansion to sustain and scale up in the business. SMEs which take the business loans, are also eligible to access free tailor-made capacity building trainings which is offered periodically by the Polaris Business Advisory Academy.

Polaris Bank is a major funding sponsor and partner for several large-impact empowerment programmes, including the Lagos State Employment Trust Fund (LSETF) through which it provides multi-million naira amenable loans to artisans operating in Lagos State. Lagos State’s informal economy, under which artisans are categorised, is estimated to employ some six million people – about three-quarters of the state’s estimated eight million labour force. Lagos alone is estimated to account for some three-quarters of Nigerians in the informal economy. Despite its evident potential, the informal economy is often faced with difficulties, one of which is the lack of access to finance. The LSETF was established by The Lagos State Employment Trust Fund Law 2016 to provide financial support to residents of Lagos State, for job, wealth creation and to tackle unemployment.

Under its ‘Polaris Education Loan’, the bank sets aside a dedicated credit line to support private school owners. The Polaris Education Loan offers both new and existing private primary, secondary, and tertiary institutions customers access to loans of up to N100 million to meet their various funding needs. About N2 billion has been disbursed in the past 20 months.

With Nigeria’s education sector at the centre of the nation’s rebirth; the credit line forms part of the bank’s effort to support Nigeria’s vital educational sector by ensuring that schools meet their goals and growth aspirations. The product offers the promoters of private schools credit facility to meet their various administrative needs: payment of salaries, finance rent, purchase of laboratory equipment, school buses, furniture, books for the library, school renovation and expansion. It takes 24 hours for customers to get the loan. This also synchronised with the Polaris Salary Advance; which provides quick finance solution that enables teachers and other employees to address spending needs such as: household bills; health expenses; repairs and replacements; unexpected travels and moving expense.

Also, Polaris Bank’s Health Sector Loan is designed to meet the funding needs of healthcare service providers in Nigeria, especially SMEs in specific health sub sectors such as hospitals-including dental and optometry clinics, pharmacies and medical laboratories and diagnostic centers among others.  The Polaris Health Sector Loan product offers a lot of benefits for SMEs including tailor-made funding, payment solutions for collections of fees, financial advisory services, capacity building programmes and dedicated relationship management among others. The product is available as overdraft or term loan with extended tenors, depending on the unique funding needs which include working capital requirement for stock and consumable purchases, term loan for rent, renovation, remodeling or expansion, acquisition of operational vehicles, generators, air conditioners and refrigerators for storage. The product is available to existing and new customers looking to grow their businesses in the sector.

With its award-winning digital lending platform, VULTe digital bank, digital lending continues on the rise, with about N10 billion disbursed within the past eight months, on course to surpass N12.8 billion recorded for the whole of 2023.

The continuing growth in digital lending underscored the user-friendly experience of VULTe. In its Digital Channels ScoreCard Report, sub-titled: Leveraging Superior User Experience (UX) on Digital Channels to drive Retail Banking Growth in Nigeria; KPMG identified five distinctive metrics to assess digital relevance including digital onboarding, payments and transfers, digital lending, self-service and customer care.

A full digital bank that provides fast, convenient and reliable solutions to banking needs; some of VULTe’s unique features include: QR payments, end-to-end account opening, instant loan request debit card request, issuance and activation, without the customers leaving the comfort of their homes, offices or wherever they may be. The platform does not just cater to Polaris Bank’s customers alone but non-customers can also download and enjoy banking services on VULTe. Another key feature is VULTe’s API Banking, which allows merchants and businesses to integrate VULTe with other business critical systems, enabling a portfolio of services including risk assessment, bank statement requests, lien accounts, direct debits and more.

The constitution of a full board for the bank two weeks ago was seen by industry analysts as a clear endorsement of the bank’s remarkable strides under the new management by the Central Bank of Nigeria (CBN).

Industry analysts expected the recent constitution of the full board of the bank, with a stronger management team and diverse board experience and expertise, to deepen growth and enhance the operational performance of Polaris Bank.

Analysts said the steady improvements in operational performances and stable management underlined the preparedness of the bank to retain a respectable and leading position as preferred digital lender in the post-recapitalisation banking industry.

The constitution of the full board by the Central Bank of Nigeria (CBN) was a regulatory approval of the silent but remarkable achievements of the Kayode Lawal-led management and an endorsement of the future of the bank.

The 10-man board is headed by Dr. Kassim Gidado as board chairman. Other non-executive directors included Dr. Akwa Okon, Mallam Umar Ambursa, Mrs. Ayaba Ayo-Joseph, Mrs. Subulade Giwa-Amu and Dr. Christopher Onosode.

The newly appointed non-executive directors will provide support for the executive management team led by Mr. Kayode Lawal, Managing Director; Mr. Chris Ofikulu; Executive Director, Retail and Commercial; Mrs. Abimbola Ozomah, Executive Director, Corporate & Investment Banking and Sharafadeen Muhammed, Executive Director, Operations.

Lawal is a seasoned professional with over three decades of experience in the banking industry. Prior to his appointment with Polaris Bank, he had a distinguished tenure at Sterling Bank Plc, where he held the position of Executive Director in charge of Corporate & Investment Banking. He is committed to excellence and leadership in the banking industry which was evident throughout his career. He is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN), and an Associate Member of the Chartered Institute of Taxation of Nigeria (CITN). Additionally, he has enriched his professional knowledge through executive education programs at prestigious institutions such as; Lagos Business School, University of Oxford, Columbia University Graduate School of Business, and Massachusetts Institute of Technology.

Gidado, the new board chairman, is an academic with over 35 years of experience in the fields of engineering, project management, and strategic development. He brings a wealth of expertise and a dynamic vision to the bank’s board. He has held prestigious roles, including Group Managing Director and Chief of Staff at MAG Group Limited, where he managed a diverse portfolio of companies across 35 countries. His extensive experience in public-private partnerships, and infrastructure development, among other strategic footprints, will be invaluable to the growth and development of Polaris Bank.

Over the years, he has advised governments and captains of industry on several strategic and policy issues in procurement, infrastructure development, and security. He recently championed the development of the North-East Stabilisation and Development Master Plan (NESDMP) for the North-East Development Commission. He produced the document that sets the Commission up in the mode for Readiness-for-Execution for the implementation of the NESDMP until the year 2030.     

A community leader of repute, Gidado is the Wazirin Jam’are in Jam’are Local Government in Bauchi State. His extensive academic, public service, and professional background will provide invaluable leadership as he assumes the role of Board Chairman.

Okon who holds a doctorate in Law, has experience as a Special Assistant on Finance and later Managing Director at the Niger Delta Development Commission (NDDC) in Port Harcourt and as a Non-Executive Director of FHA Mortgage Bank Limited in Abuja, where he represented the Federal Government’s interest. A Chartered Accountant, Okon is an accomplished professional with a rich educational background, including attending the Senior Executive Programme on Strategy, Leadership, and Transformation at the London Business School. He holds fellowships with both the Institute of Chartered Accountants of Nigeria (ICAN) and the Chartered Institute of Bankers of Nigeria (CIBN). He is also a lawyer. His notable roles include serving as the Managing Director and CEO of Akwa Savings and Loans Limited from 2007 to 2013, where he successfully implemented turn-around strategies for the mortgage finance institution owned by the Government of Akwa Ibom State, Nigeria.

Ambursa is an expert in Enterprise Transformation and Development Finance with over 30 years of experience in the banking industry, including a distinguished tenure at the Central Bank of Nigeria.

With 12 years of consulting expertise, Ambursa is renowned for his strong risk management skills and extensive experience in product management across various areas including credit, liquidity, market risks, regulatory capital, and customer experience. His deep understanding and dedication to excellence, make him a valuable addition to Polaris Bank’s board.

He holds a Master of Science in Banking & Finance from Bayero University, Kano, and a Bachelor of Science in Economics from the University of Sokoto.

Ayo-Joseph has over three decades of experience in the banking industry. A member of the Chartered Institute of Bankers of Nigeria (CIBN), she brings to the board as a Non-Executive Director a wealth of experience in corporate management, business development, and strategy execution.

Her track record includes serving as an Executive Director at Bank PHB, where she played a critical role and delivered transitional change between 2010 and 2011 following her appointment by the CBN. She is credited with implementing business continuity plans and driving profitability during the transition period. Her corporate governance and strategic planning footprints will ensure that Polaris Bank continues to adhere to the highest standards while pursuing sustainable growth.

She holds various professional memberships, including with the Nigeria Institute of Management (NIM), the Nigerian Bar Association, and WIMBIZ (Women in Management, Business, and Public Service).

Giwa Amu holds an LL.B Hons degree in Law and an MBA  both  from the University of Warwick, UK, and brings over 30 years of experience in financial services, real estate investment & development, and business process re-engineering across the West African region to the Polaris Bank Board.

Her extensive background includes notable non executive  board positions and successful leadership roles. She is currently the Founder & CEO of Brookstone Investments and Properties .

Prior to this, she held leadership positions in Treasury, Corporate and Commercial Banking in Ecobank Nigeria Plc and First Bank Plc. She was also Managing Director at FBN Mortgages Limited where she spearheaded the  turnaround and return to profitability of the company  and  Managing Director, FBN Bank Ghana

Onosode holds a doctorate in Economics and energy major from Kent University, UK. He joins the board of Polaris Bank with over 30 years of experience in business systems analysis and design, strategy and operations, project management, and policy analysis.

Onosode’s career spans significant roles and measurable impact with multinational companies and financial institutions, including Shell Petroleum, UK, PricewaterhouseCoopers, and the Debt Management Office of Nigeria (DMO). His deep sectoral knowledge and strategic insight will contribute to the drive of Polaris Bank’s operations and strategic initiatives, moving forward.

Ofikulu is the Executive Director in charge of Retail and Commercial Banking for the bank. He possesses extensive experience in the banking sector, spanning over 30 years. Prior to his appointment by the CBN on January 10, 2024, he held the position of Country CEO at UBA Ghana and Managing Director at Diamond Pension Fund Custodian Limited.

He holds a First Class Degree in Industrial Mathematics from the University of Benin and an MBA from the University of Lagos and has over the years, attended high-impact and prestigious business training at The Wharton Business School, IESE Business School, and Lagos Business School. Additionally, he has received training in Leadership and Corporate Governance from the Henley Business School and completed the Advanced Company Direction Programme at the Institute of Directors (IoD), London.

Ozomah is the Executive Director in charge of Corporate and Investment Banking. She brings over three decades of experience in the banking and financial services industry, with a proven track record of driving growth and innovation. Up until April this year, Mrs. Ozomah was the General Manager and Director of Global Network Banking at Citibank Nigeria, where she headed the Specialized Industries Division as a Senior Executive.

She had overall responsibility for the bank’s high-revenue portfolio, which comprised strategic specialized industry segments for multinational corporations across oil & gas, manufacturing, pharmaceuticals, technology, digital natives, and media. Her role also included managing related value chains and selecting top-tier local corporate relationships.

She holds an MBA degree from Warwick Business School, University of Warwick, Coventry, UK, and a Bachelor’s degree in Economics from Obafemi Awolowo University, Ile Ife, Osun State.

Muhammed is the Executive Director in charge of Operations of the Bank. He served as the Chief Financial Officer (CFO) at Citibank, where he oversaw significant financial operations and strategic initiatives. With over 15 years of experience in high-level finance roles, including a notable tenure at Citibank Nigeria, he has demonstrated strong strategic insight and financial acumen. A CFA charter holder with an MBA from New York University, Sharafadeen’s career began at Citigroup as Vice President of Corporate Financial Planning & Analysis. His roles at Citibank Nigeria included Head of Strategy & Business Planning and CFO. He has also attended high-level leadership training at Ivy League institutions.