|
Listen now
|
ARM Pension Managers, Pension Alliance Limited, Premium Pension, Sigma Pension Limited, and Stanbic Pension Managers Limited, have the highest return on equity among Pension Fund Administrators (PFAs).
This means these four PFAs have put capital to work generating higher profit than their peer rivals as the Pension Industry remains one of the most lucrative in Nigeria.
For instance, ARM Pension has a return on equity (ROE) of 34.92 percent as at December 2021, while Pension Alliance Limited, Premium Pension, Sigma Pension, and Stanbic IBTC, recorded ROE of 34.42 percent, 30.15 percent, 29.17 percent, and 29.11 percent respectively.
This is followed by: FCMB Pensions Limited, 25.21 percent; Crusader Sterling Pension, 25.13 percent; Leadway Pension Assurance Limited, 21.80 percent; NPF Pension Managers, 18.14 percent;, NLPLC, 16.56 percent; Trust Fund Pension Limited 15.69 percent; Oak Pension, 15.49 percent; First Guarantee Pension Limited, 13.10 percent, and Fidelity Pension, 11.72 percent.
The return on equity for is a common measurement used by analysts to assess the returns made by firms on the initial capital invested. Without a substantial return on this capital, companies may suffer low income and be unable to pay for its administrative expenses or other standard costs.
It noted that the PFAs recorded combined return on equity of 16.04 per cent, which indicated that the PFAs sustained their profitability in the year under review.
They collectively grew combined profit by 6.15 percent to N40.61 billion in December 2021 from N38.47 billion in 2020.
Interestingly, they are taking advantage of a growing population, transformation regulations, full enforcement of the PRA 2014 in terms of compliance, and greater allocation of pension assets to equities and real assets to magnify earnings.
The industry AUM (RSA AUMs + Other non-RSA funds) has grown at a 22% CAGR between 2007 and 2021 (a 15-year period) to N13.42tn in 2021 (US$30.86bn, CAGR of 11%) on the back of rising number of RSA holders, new inflow of funds (contributions less withdrawals) into the funds and net investment gains.
Industry AUM has grown by 7.0 percent year to date (YTD) to stand at N14.36 trillion ($33.47 billion, +2.4 percent YTD) as at 31 July 2022.
The lucrativeness of the Industry, future growth prospects, and strong balance sheet are responsible for banks growing interest in the sector given the rapidity of mergers and acquisitions.
“We expect more M&A deals in the industry to be announced in the coming months,’’ said analysts at Chapel Hill Denham Limited.
“In our view, investment in and utilisation of advanced technology and digitisation to deliver excellent service to customers will be central to winning in the pension industry over the long term,” said the analysts.