(Ecofin Agency) - Polaris Bank Limited, created from the legacy Skye Bank Plc and backed by the Central Bank of Nigeria, released its audited financial results for the year end 2020. The bank saw a wrapping up of N28.9 billion profit before tax, compared to N27.34 billion in 2019.
Accordding to the financial statement, this performance is driven by the combination of the significant reduction in interest expenses due to the Bank’s pursuit of low interest-bearing deposits as well as lowering impairment charges on loans and other financial assets.
“Polaris Bank has achieved significant milestones since its inception in September 21, 2018, when we started this journey. We have since grown to earn the confidence of the banking public, 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 result demonstrates the importance of the deployment of appropriate strategies, and effectively validates our recent investment in technology solutions and digitization of our products and processes,” said Mr. Innocent C. Ike, Managing Director/Chief Executive Officer of Polaris Bank Limited.
While the bank’s digital transformation remains one of the strong strategies to strengthen its balance sheet, the bank is not cleared off its inherited loan portfolio from Skye Bank Plc. As a result, it had one of the highest non-performing loan ratios in the industry. According Proshare Research in 2019, Polaris Bank’s non-performing loans stood at 46%, which was considerably very high compared to some selected key banks in the industry that barely reached 10%.
With the outlook for the economy looking gloomy - due to, among others, volatility of oil prices that began in the 4th quarter of 2019, the initiative backed by the world bank to disengage from activities, investments that have a negative impact on climate, and the disruption caused by the novel coronavirus - bringing down the non-performing loans ratio to the single digit (6.3% required by the Central Bank of Nigeria) becomes more challenging.