Nigeria’s banks hold ground in $8.61bn capital imports

By Phillip Isakpa & Charles Abuede

Foreign toppers‭: ‬StanChart‭: $‬2.5bn‭; ‬StanbicIBTC‭: $‬2bn‭; ‬Citibank‭: $‬1.79bn

Nigerian toppers‭: ‬First Bank‭:‬‭ ‬$798m‭; ‬Access‭: $‬312m‭; ‬Zenith‭: $‬144m‭; ‬GTB‭: $‬110m

Some of Nigeria’s leading banks were deeply involved in both attracting and serving as channels through which foreign capital of around $8.61 billion was imported into the country in the first nine months of the year, official data distilled and analysed by Business A.M. have shown.

This newspaper’s analysis shows that the banks, also posting strong credentials in their 9-months’ financial performance with respect to their profit after tax (PAT) positions, individually acted as the conduit for different amounts that legitimately came into the country for capital investment and captured in official government data.   

The distilled information about the financial intermediary and advisory activities of the banks captures a time-frame during which the Nigerian economy began to observe the gradual easing of lockdown rules and economic activities returned to some degree of normalcy in the third quarter of 2020 following a global pandemic that has devastated major economic activities around the globe, and which continues to disrupt global supply chains.

The country’s top tier lenders showing resilience amid the disruption of the economy recorded significant growth in their profit after tax (PAT) in the first nine months, and topped it off with an expansion in the total foreign direct investments (FDI) that came into the economy through the banking sector.

Financial data from the top ten Nigerian banks accessed and analysed by Business A.M. showed that in a 9-month (January through September, 2020) period, there was significant performance across the major banks, amid the coronavirus crisis, which dampened investors’ confidence and also harmed the earning powers of businesses, including these banks.

The National Bureau of Statistics (NBS) recent data indicate that Nigeria’s largest banks received $8.61 billion in 9 months as foreign capital imported that came into Africa’s largest economy through their channels.

Top banks’ 9 months’ PAT vs. Capital importation

A bank by bank detailed look at the data shows that Zenith Bank made N159.3 billion for itself and shareholders in profit after tax in the first within 9 months of 2020. In raking in that amount, the bank also accounted for 1.7 per cent or $144.44 million of the total capital importation into Nigeria through the banking system, between January and September.

Also, Guaranty Trust Bank (GTB), which recently secured approval from the Central Bank of Nigeria to restructure and operate as a holding company (HoldCo), gathered the sum of N142.3 billion as profit for the 9 months period and accounted for 1.3 per cent or a total of $110.05 million as capital imported into the economy.

Access Bank and UBA who stand resilient within the Nigerian banking industry owing to strategic expansion moves to extend their frontiers across the continent of Africa also took in PAT of N102.3 billion and N77.1 billion in a 9 months period, respectively, despite the impact of the downturn that affected the banking sector, as well as the economy.

The two systemically important Nigerian banks also contributed 3.62 per cent and 1.1 per cent, which translates to $312 million and $94.96 million respectively as the amount of capital that was imported through their banking channels. 

First Bank and Stanbic IBTC recorded profit-after-tax of N68.2 billion and N66.2 billion, respectively, according to their third-quarter financial statements filed to the Nigerian Stock Exchange (NSE).

Capital importation data from the Abuja based statistics office, further revealed that Stanbic IBTC stands second in the ranking of banks with the highest receipts of investments from abroad with over $2 billion after Standard Chartered Bank, which recorded $2.52 billion in investment receipts signifying 23.3 per cent and 29.3 per cent, respectively. Whereas $1.79 billion came in through the Citibank channels, First Bank helped process $797.8 million in investments into Nigeria through its channels, which is 9.27 per cent of the total $8.61 billion investments that came in in nine months. Access Bank processed $312 million worth of capital importation during the first nine months of the year.

Nigeria’s FUGAZ join party of top capital receivers in the banking sector during Q3 ‘20

A further analysis of the data from the National Bureau of Statistics (NBS) shows that during the third quarter of 2020, the total value of capital importation into Nigeria stood at $1.46 billion, up from $1.29 billion in the second quarter of 2020. This value represents a 12.86 per cent increase quarter on quarter, but a decrease of -74.03 per cent from $5.63 billion when compared to the total value received during the same period in 2019.

Similarly, an analysis of the capital importation data by bank showed that Standard Chartered Bank emerged at the top of capital investment inflow through banks in Q3 2020 with $438.98 million.

It is followed by Stanbic IBTC Bank through which $279.68 million was brought into the country; and Citibank Nigeria Limited, with $380.74 million, during the period.

On the other hand, the Nigerian FUGAZ group of banks, comprising First Bank ($55.79 million), United Bank for Africa ($12 million), Guaranty Trust Bank ($9.93 million), Access Bank ($10.55 million) and Zenith Bank ($51.33 million) all received capital inflows through their channels as outlined against them.

Meanwhile, Fidelity Bank received $1.6 million; First City Monument Bank (FCMB) recorded $40.82 million; Sterling Bank and Union Bank recorded $8.87 million and $23.33 million respectively, while Ecobank ($49.43 million); Wema Bank ($7.03 million); Rand Merchant ($62.61 million); and FSDH Merchant Bank ($28.78 million) also recorded capital importation through their channels in the various amounts stated against them respectively.

Although largely dominated by foreign majority-owned banks like Standard Chartered, Stanbic IBTC and Citi, analysts say they expect that with Nigerian banks such as Access Bank, UBA, GTB making forays into more global markets, especially in Africa, and with the coming of the African Continental Free Trade Area (AfCFTA) mechanism coming into place, Nigerian banks should begin to establish global relationships to win the trust and confidence of foreign direct investors to become channels through which capital is brought into the country.