Nigeria’s top five banks by market capitalisation have posted impressive earnings in the first half of 2023, despite the macroeconomic headwinds and regulatory reforms. According to their financial statements, the five banks, which are FBN Holdings, United Bank for Africa (UBA), GTCO, Access Holdings and Zenith Bank, achieved a combined gross income of N4.2 trillion in the six-month period, up from N1.96 trillion in the same period in 2022. This represents a 114 per cent increase year-on-year and a 6.7 per cent decrease from the N4.5 trillion recorded in the full year of 2022.
The banks’ performance was driven by various factors, such as the rising interest rate and naira devaluation, which boosted their income from loans and foreign assets, as well as the improved investors’ confidence in the equities market, which lifted their share prices. The banks also benefited from the digital transformation and innovation that enhanced their operational efficiency and customer service.
However, the banks also faced some challenges, such as the high inflation rate, which eroded the purchasing power of consumers and businesses, the security issues in food-producing regions, which affected the agricultural sector, and the removal of fuel subsidies, which increased the cost of transportation and energy. The banks also had to comply with the regulatory reforms initiated by the Central Bank of Nigeria (CBN), such as the loan-to-deposit ratio policy, the global standing instruction policy, and the open banking framework.
The banks’ stakeholders, including operators, investors and shareholders, have expressed optimism about the sustainability of their performance, but also urged them to restructure and diversify their business models to cope with the changing environment. They also called on the government to pursue policies that would address the problems facing the real sector, such as the forex scarcity, the high inflation, and the low productivity.
The banks’ earnings reflect the resilience and dynamism of the Nigerian banking sector, which has been one of the key drivers of the country’s economic growth and development. The banks have also contributed to the social and environmental well-being of the nation, through their corporate social responsibility initiatives and their support for the sustainable development goals.
Source: The Guardian Nigeria
