Nigeria’s FUGAZ banks navigate 2023 headwinds with N9.6trn gross earnings

ONOME AMUGE

Nigeria’s banking sector, navigating through a perfect storm of economic headwinds, steered a very profitable course and rewarded their shareholders with impressive returns in the 2023 financial year, according to a review of the reports turned in by the country’s biggest banks in the last few weeks.

The year 2023 marked a pivotal point in Nigeria’s banking sector, as the country’s financial institutions faced an uphill battle against economic instability, grappling with a myriad of challenges brought about by diverse factors. These included the steady rise of inflation, the adverse impact of global events on the economy, domestic market imbalances, inflexible economic structures, amid policies that sent ripples of unintended consequences throughout the domestic macroeconomic landscape.

A deep dive by Business a.m. into the 2023 financials of Zenith Bank Plc, Access Holdings Plc, United Bank for Africa Plc, Guaranty Trust Holding Company Plc, and First Bank of  Nigeria (FBN) Holdings Plc, all of which belong to the industry’s elite group known as FUGAZ banks in Nigeria, revealed a staggering 55.11 percent surge in their combined gross earnings from a healthy N4.53 trillion in 2022 to a massive N9.633 trillion in 2023. 

The financial performance of the FUGAZ banks shows that the Tier-1 financial institutions generated an impressive N3.054 trillion in pretax profit, showcasing a 172.4 percent increase over the 2022 financial year’s N1.125 trillion.

A breakdown of their performances revealed that in a financial year under the watch of Herbert Wigwe, its late group chief executive officer, Access Holdings Plc (also known as Access Corporation) displayed resounding financial might to claim leadership of the earnings table in the Nigerian banking sector in 2023 with an outstanding gross earnings of N2.594 trillion. Not to be outdone, Zenith Bank, hot on the heels of Access Holdings, posted a gross earnings figure of N2.132 trillion, displaying an equally impressive financial acumen. The resilient performance of UBA and First Bank also ensured that these financial institutions were not far behind, with respective gross earnings of N2.08 trillion and N1.52 trillion. GTCO claimed a solid fifth position in the 2023 Nigerian banking landscape, clocking in at a commendable N1.187 trillion in gross earnings.

A fiscal year of unparalleled success for Zenith Bank saw the banking giant rake in N795.96 billion pretax profit, outstripping its FUGAZ peers, and it is followed closely by UBA with its robust N757.68 billion pretax profit. Access Holdings had the third largest pretax profit at N729 billion, which saw the bank join Zenith and UBA as Tier-1 banks with over N700 billion profit before tax threshold in 2023. 

GTCO maintained its position as a premier player with a pre-tax profit of N609.3 billion firmly securing a fourth-place in the ranking. FBN Holdings, in turn, closed the top five rankings with an equally commendable pre-tax profit of N362.24 billion.

At the time of filing this report, it is essential to highlight that the financial data referenced for FBN Holdings is unaudited. The company has not yet released its audited financial statements, with the unaudited figures being disclosed to the Nigerian Exchange (NGX) in February 2024. The provisional financials, while offering a preliminary indication of the company’s performance, was interpreted with the understanding that they may be subject to adjustment following the completion of the auditing process.

As the curtains closed on a challenging 2023 fiscal year, the management of Nigeria’s tier-one banks rejoiced in the triumph of their strong performance and resilience, each bank riding the currents of success with remarkable growth across all major financial metrics.  The voyage was equally rewarding for the shareholders as their investments were anchored on strengthened dividends.

Commenting on the 2023 financial results, Roosevelt Ogbonna, the managing director/CEO, Access Bank, reflected with pride on the financial metrics that bore witness to the bank’s remarkable growth, strategic manoeuvres, and expansion into key trade hubs. He noted that the bank’s  relentless focus on customer-centricity, digital innovation, and operational excellence positioned it strongly to capitalise on emerging opportunities.

“As we enter the consolidation and efficiency phase of our Africa and international expansion strategy, we remain committed to driving sustainable growth, enhancing shareholder value, and delivering exceptional banking experiences to our customers across Africa and beyond,” Ogbonna added.

Segun Agbaje, the group chief executive officer of GTCO, remarked that the bank has been able to leverage its unique strengths and capabilities to create value and opportunities for its verticals and customers, despite the challenges posed by regulatory reforms, global uncertainties, and heightened competition.

Agbaje noted: “Also important to our success is our relentless obsession with innovation and offering great customer experiences as demonstrated by the successful redesign and upgrade of our mobile banking application, GTWorld.’’

Oliver Alawuba, group managing director/chief executive officer of UBA, expressed pleasure over the unprecedented success achieved by the group in FY 2023. He stated further that the bank’s diversified business model – hinging on a Pan-African and international strategy,was validated by the contributions of its non-Nigerian operations, fortifying the group’s determination to expand its customer base, funding, digital, and transaction banking business across the African continent, paving the way for a prosperous FY2024.

“Driven by our customer service and execution-led delivery model, we will continue to expand our market share and create value for our shareholders and meet the expectations of our various stakeholders,” the GMD stated.