Top five tier-one Nigerian banks by market capitalisation posted combined gross earnings of N4.2 trillion in their 2023 half-year (H1) operations, a figure that 6.7 per cent less than 2022 full-year earnings.
The five banks, which are FBN Holdings, United Bank for Africa (UBA), GTCO, Access Holdings and Zenith Bank, achieved gross earnings of N4.2 trillion in H1, up from N1.96 trillion recorded in the corresponding period in 2022.
The H1 figure posted by the five banks is close to N4.5 trillion achieved in the 2022 full-year operations, despite the macroeconomic challenges. But operators and investors over the weekend, expressed hope over the sustainability of the performance, telling them to re-structure to survive ongoing reforms.
However, they warned that if the government fails to pursue rigorous policies that would help tackle the problems facing the real sector, the reforms would impact the fortunes of the banks.
President of New Dimension Shareholders Association of Nigeria, Patric Ajudua, said the rising interest rate and naira devaluation, following the apex bank’s resolve to keep increasing rates to fight inflation, have given banks the leverage to charge more for loans and advances.
According to him, most tier-one banks also have a large foreign asset, which has given them the leverage to make many gains from forex, coupled with the income from yield from the fixed market.
He added that the sustainability and determination of the current government efforts to grow the economy by addressing forex issues, high inflation and encouraging private sector participation in the economy, would continue to improve banks’ performance.
“The achievement is expected according to their quarterly report. Recall that improved investors’ confidence spurred activities in the equities market, which have seen all share indexes witnessing astronomical improvement.
“As part of efforts to achieve a convergence between the official and the black-market exchange rates of the dollar, the present administration has allowed the naira to weaken.
“This has enabled lenders that have some of their loans denominated in the dollar to make bumper harvest. Deliberate efforts to grow the real sector will boost the trend.”
Chief Executive Officer of Wyoming Capital and Partners, Tajudeen Olayinka, said the figures were made possible with price adjustments and high inflation.
He stated that the performance would be sustained if the economic managers would tackle problems associated with high inflation head-on with appropriate price adjustment mechanisms to forestall reoccurrence.
In addition, President of the Independent Shareholders Association of Nigeria, Moses Igbrude, said the growth is an indication that the banking industry has improved despite the harsh operating environment.
However, he noted that the improved performance might not be sustained except the current operating environment, which the manufacturers and operators in the real sectors are contending with, improves.
A breakdown of the gross earnings of the banks for the 2023 H1 performance showed that United Bank for Africa (UBA) recorded the highest figure amounting to N981.8 billion as against N372.4 billion posted in the corresponding period in 2022, representing 164 per cent growth.
Zenith Bank followed with N967.3 billion, 139 per cent higher than N404.8 billion recorded in H1, 2022. Access Bank ranked third with 58 per cent increase in gross earnings to N940 billion from N591.8 billion achieved within the same period in 2022.
GTCO trailed with N672.6 billion, representing 181 per cent growth when compared to N239.3 billion recorded previously while FBN Holdings’ gross earnings also rose from N359.2 billion to N656.6 billion representing an increase of 82.8 per cent.
Recall that following sustained depreciation in naira and rising inflation, the cost of raw material input for consumer goods companies rose by 18.5 per cent in the first half of 2023, a development that has continued to impact negatively on the real sector, causing manufacturers to continue to groan in pains
According to the National Bureau of Statistics (NBS), the inflation rate in Nigeria closed H1’23 at 22.79 per cent. The figure further accelerated to an 18-year high of 25.8 per cent in August, the highest jump since August 2005.