From a distance, Nigeria’s banking sector looks very competitive, but when you look at each bank’s financial statements, there are double numbers in the millions separating them.
In return for their heavy investments, banks and shareholders expect to make profits. According to audited and reported financial statements, the profitability of Nigerian banks is beyond doubt.
A major driver of bank performance has been the Covid-19 pandemic, which impacted digital service deployment plans earlier in the year. Nonetheless, the pandemic has worked in their favor as Nigerians increasingly rely on mobile banking for transactions and avoid bank rooms for fear of contracting Covid-19.
Methodology: A bank’s gross profit is an aggregation of all sources of income received by the bank without taking into account operating expenses, interest expense, or loan write-downs. It determines how well a bank has taken advantage of all of its available assets and resources to make money. It is important to note that the bank with the most gross income is not always the most profitable bank. Profitability is determined by how the bank manages its operating costs, loan losses and taxes.
Nigeria’s most valuable bank in terms of market value and the second most profitable bank last year reported a 7.65% drop in gross profits.
- As published in the company’s audited semi-annual report, its gross profit for the first half of 2021 has increased from 225.14 billion naira in the corresponding period of 2020 to 207.91 billion naira.
- The reason for this decline is that net interest income fell 16.11%, from 127.62 billion naira in the first half of 2020 to 107.06 billion naira in the first half of 2021.
- GTCOs increased lower commissions and higher fees compared to the previous year, but that was not enough. To make matters worse, its operating expenses also increased in the first half affecting its profits. Thus, profit before tax fell from 166.58 million naira to 93.06 billion naira and earnings per share fell to 2.79 naira from 3.32 naira.
GTCO has always performed well, so we expect the bank to rebound by the end of the year. He’s also just adopted a HoldCo structure that will need time to start thinking about overall winning capacity.
According to reports from one of Nigeria’s oldest banks, gross profits in the first half of the year were N291.2 billion (-1.7% year-on-year). A 22% drop in interest income caused by a 56% drop in income from investment securities led to a slight decline in profits.
- FBNH also drew significant commission income, which fell from N46.7 billion to N 57.3 billion, which allowed it to offset lower income from interest on loans.
- FBNH also posted strong growth in net profits from commissions and fees, rising from N46.7 billion to N57.3 billion, one of the highest in the industry (just behind Access Bank).
- Operating expenses increased 9.6% yoy, while all major contributory lines increased – personnel costs (+ 3.4% yoy to 51.24 billion naira), AMCON levy ( + 35.4% year-on-year to N30.68 billion), and the NDIC premium (+ 9.4% year-on-year to N 6.81 billion).
- We saw a significant drop in First Bank’s cost / income ratio to 77% in the first half of the year, one of the best it has seen.
- FBN Holding Managing Director UK Eke said that due to the COVID-19 pandemic and low interest rates, macroeconomic conditions remain difficult.
FBN Holdings is confident that it will continue to provide innovative solutions that will enrich the customer experience and deepen financial inclusion, despite these negative factors negatively impacting overall revenue generation.
Gross profits of Nigeria’s third-most profitable bank rose from 300.6 billion naira to 316 billion naira, while assets rose from 7.7 trillion naira to 8.3 trillion naira.
- It is one of the few banks to have recorded higher gross profits year over year.
- UBA impressively recorded much smaller loan depreciation, from 7.8 billion naira last year to 4.1 billion naira during the period under review.
- Customer deposits also crossed the 6 trillion naira mark, increasing 7.4% to 6.1 trillion naira during the period under review, from 5.7 trillion naira in December 2020.
- UBA also saw significant growth in its net commission and fee income, from N38.5 billion to N45.7 billion.
The board of directors of UBA Plc has declared an interim dividend of 20 kobo per share for each 50 kobo common share held by shareholders in accordance with its culture of paying interim and final dividends in cash.
Its gross profit for the first half of 2021 fell 0.15%, from 346.09 billion naira in 2020 to 345.6 billion naira.
- Based on its audited interim report for the six-month period ended June 2021, the bank’s interest income increased from 216.9 billion naira in the first half of 2020 to 203.9 billion naira for the same period this year. . Zenith also reported a significant increase in net commissions and fees, from 33.5 billion naira to 47.6 billion naira. This helped mitigate the decline in interest income.
- It is also important to note that Zenith also recorded higher net interest income in the first half of this year compared to the same period in 2020.
- Zenith Bank also increased its customer deposits to 5.7 trillion naira, from 5.3 billion naira at the end of 2020.
Michael Otu, the bank’s general secretary, said in a statement that shareholders whose names appear in the membership register on September 10, 2021, will receive an interim dividend of 30 kobo for each share of N50k.
Nigeria’s largest bank in terms of total assets and customer base recorded a 13.6% increase in gross profits to 450.6 billion naira, from 396.7 billion naira, by far the best performing in all banks examined.
- Access Bank appears to have achieved this feat by aggressively increasing its loan portfolio from 3.6 trillion naira to 3.9 trillion naira. However, the biggest impact on gross income was its commission and fee income, which fell from N40.5 billion to N 58.7 billion. Access Bank appears to be leveraging its asset base to drive revenue growth.
- But while Access Bank raked in billions in gross profits, its loan losses remained high at 28.6 billion naira in the first half of this year, compared to 29.6 billion naira incurred last year. This weighed heavily on the bank’s profitability.
- It is important to note, however, that the independent auditors of PricewaterhouseCoopers have noted an increase in the bank’s provisioning for loans that could prove unsustainable in the future, as this trend could limit the bank’s rise.
A total of N10.7 billion was also allocated by the Board of Directors of Access Bank Plc as dividends to shareholders for the period ended June 30, 2021.