Nigerian banking sector boom seen in N1.3trn Q1’24 pre-tax profit haul

• GTCO, Zenith, Access, UBA lead the way

Onome Amuge

A booming Nigerian banking sector continues to show itself in two earnings seasons that have rolled in in quick succession, from the release of full-year 2023 financials to first quarter 2024 results announcements that have shown earnings and profitability in far more healthy conditions than the state of the Nigerian economy.

The first quarter of 2024 has witnessed a historic milestone in Nigeria’s banking sector as eight of the industry’s heavyweights, including Guaranty Trust Holding Company Plc, Zenith Bank, Access Holdings, United Bank for Africa (UBA) Plc, and four others  collectively declared a N1.333 trillion profit, shattering previous records.

Despite the turbulent local and international financial markets, the eight banks which also include Wema Bank Plc, FCMB Group Plc, Fidelity Bank Plc, and Stanbic IBTC Holdings Plc, recorded a triumphant start to the year, boasting a  255.47 percent  profit surge from the N374.907 billion achieved in the same period last year, according to their recently released financial results.

Analysts have attributed the surge in bank profits to a significant increase in net interest margins (NIMs), driven by the recent hikes in the monetary policy rate. It is believed that the move by the central bank has created a favourable environment for banks to thrive, resulting in a substantial boost to their bottom line.

However, the financial community is still eagerly awaiting the Q1 2024 results from FBN Holdings Plc, Ecobank Transnational Incorporated Plc (ETI), Unity Bank Plc, and Jaiz Bank Plc, which are yet to be revealed to the public.

In a quarter marked by remarkable growth and financial dexterity by Nigerian financial institutions,  Guaranty Trust Holding Company announced a profit of N509.349 billion, representing an increase of 587.5 percent over N74.1 billion recorded in the corresponding period ended March 2023, to emerge the most profitable bank in Nigeria for the period under review. Notably, the bank accounted for a significant 38 percent of the total N1.333 trillion generated by the eight banks as analysed by Business a.m.

Analysts stated that the bank’s performance was driven by a significant surge in fair value gain on financial instruments, which soared to N331.55 billion in Q1 2024 from  N99 million fair value loss in Q1 2023.

Segun Agbaje, group chief executive officer, commenting on the company’s first quarter results, stated that they reflect the unfolding value of what the group has created across all its business verticals, including banking and payments, funds management, and pension, underpinned by its innovative holding company structure.

Meanwhile, Zenith Bank recorded the second highest revenue in Q1 2024, with a 269.7 percent surge in profit before tax to N320.194 billion, showcasing its impressive growth trajectory. According to the financials, interest and non-interest income contributed significantly to the growth in gross earnings. This is as interest income grew by 155 percent from the N192 billion reported in the quarter ended March 2023 to N489 billion in the period to 31 March 2024.

Access Holdings Plc secured the third largest profit, proving its mettle among the top contenders in Q1 2024, with a pre-tax profit of N202.739 billion. During the period under review, Access Holdings net interest income rose 189 percent to N275.8 billion, up from N95.3 billion in the corresponding period of 2023. The group’s net fee and commission income also saw a healthy boost, swelling to N86.9 billion from N45.4 billion in Q1 2024,, showcasing the company’s growing financial prowess.

UBA also showcased its financial resilience with an impressive 155 percent year-on-year surge in profit before taxation to reach N156.3 billion from the N61.4 billion posted in Q1 2023. This remarkable performance secured the bank’s position as fourth amongst the eight banks under review.

The impressive financial performance of the group also reflected in the reported net income of N142.6 billion during the quarter, a 166 percent leap from the N53.6 billion posted in the corresponding quarter of 2023.

Stanbic IBTC Holdings also cemented its status as a financial powerhouse, earning the fifth spot among the eight most profitable banks in the report. During the period under review, Stanbic IBTC Holdings recorded a 73 percent year-on-year growth in revenue to N62.713 billion, compared to N36.3 billion pre-tax profit posted in Q1 2023.

The bulk of the group’s income came from interest income, as the group posted a net interest income of N76.9 billion, marking a 111.4 percent YoY growth of the N36.4 billion net interest income posted in Q1 2023.

Fidelity Bank occupied  the sixth spot, continuing its upward climb as profit before taxation soared 120.1 percent to N39.5 billion from the N17.9 billion recorded for the same period in 2023.

Nneka Onyeali-Ikpe, managing director and chief executive officer of Fidelity Bank Plc, shared her satisfaction with the bank’s impressive results for the quarter, attributing the robust performance to the bank’s relentless pursuit of customer-centricity, digital innovation, and operational excellence.

FCMB Group secured the seventh spot with a respectable pre-tax profit of N31.344 billion in Q1 2024, while Wema Bank rounded out the list in eighth place, achieving a pre-tax profit of N11.150 billion during the same period.

FCMB’s first-quarter 2024 financial results showcased a 192.6 percent  year-on-year profit before tax of N31.3 billion compared to N10.7 billion in the same period in 2023.

Ladi Balogun, the group chief executive of FCMB Group Plc, expressed confidence that the growth trend will be sustained going forward.

He stated: “We continue to leverage our unique group structure to build a technology-driven ecosystem that fosters inclusive and sustainable growth in the communities we serve.

“This strategy is enabling us to deliver robust performance in spite of the challenging domestic and global environment. Barring unforeseen circumstances, we believe our growth trend will be sustained and accompanied by improving efficiencies arising from greater scale and ongoing digitisation.”