Nigeria’s Leading Banks Post N17.3 Trillion Gross Earnings, Profits Surge by 60%

0

By Tochi Nonso

Nigeria’s leading five banks have demonstrated impressive financial resilience despite ongoing economic challenges, achieving significant growth for the 2024 fiscal year. With a combined pre-tax profit (PBT) of N5.1 trillion, they marked a 59.4% increase compared to the N3.2 trillion reported in 2023. This surge was driven by factors such as high interest rates, favorable foreign exchange revaluation, and robust non-interest income growth.

The top five banks—First HoldCo, United Bank for Africa (UBA), GTCO, Access Holdings, and Zenith Bank—have seen substantial progress in their financial performance, reporting a combined gross earnings increase of 80%, from N9.6 trillion in 2023 to N17.3 trillion in 2024.

Zenith Bank led the pack, posting a pre-tax profit of N1.32 trillion, an impressive 67% growth from N796 billion in 2023. GTCO closely followed, doubling its pre-tax profit by 107.8%, reaching N1.266 trillion from N609 billion in the previous year. Other players, Access Corp and UBA, also reported strong figures, with pre-tax profits rising to N867 billion and N803.7 billion, respectively. First HoldCo showed the most dramatic growth, with a 124% leap in pre-tax profit, from N347.9 billion in 2023 to N781.9 billion in 2024.

These remarkable figures reflect the Nigerian banking sector’s adaptability amid the country’s economic volatility. By capitalizing on high interest rates, currency fluctuations, and strong foreign exchange gains, these banks have successfully maintained profitability. Experts point to strategic treasury management and liquidity optimization, including the issuance of short-term commercial papers, as key drivers behind the sector’s stellar results.

Looking ahead, however, experts foresee challenges in 2025, with expectations of lower interest rates and a more stable naira, potentially compressing profit margins. While these factors may reduce profitability, banks that focus on growing their loan books, enhancing non-interest income sources, and capitalizing on trading activities are expected to remain attractive to investors.

Charles Abuede, a research analyst at Cowry Asset Management, expressed optimism for the sector’s future. He noted that the banking sector’s performance in 2024 sends a positive signal for 2025, despite the prevailing economic and regulatory pressures. Abuede emphasized that the banks’ strong revenue growth, fueled by high interest rates and currency volatility, was a key factor in their success. He also highlighted that the Central Bank of Nigeria’s (CBN) policy decisions, such as the rise in the Cash Reserve Ratio (CRR), forced banks to adopt more creative liquidity strategies, spurring further growth in deposits and loan portfolios.

Investment banker Tajudeen Olayinka praised the sector’s resilience, asserting that Nigerian banks have proven their ability to thrive in challenging economic conditions, including high inflation and slower GDP growth. He emphasized that the long-term sustainability of the sector’s growth will depend on continued economic reforms and the creation of further opportunities.

Looking to the future, Tunde Amolegbe, Managing Director of Arthur Steven Asset Management, stressed that the high interest rate environment remains favorable for the banking sector. He also pointed to the increasing investment in digital and retail banking as a major growth driver for the industry, offering additional revenue streams.

While challenges such as narrowing margins or shifts in policy remain, analysts remain confident that, as long as interest rates remain relatively high, Nigerian banks will continue to show strength and resilience, ensuring a positive outlook for the sector in 2025.

Leave A Reply

Your email address will not be published.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More