- Increase loans, advances to customers to N16.99trn
- Remittances to AMCON, NDIC rise 22.6% to N274.6bn
Nigerian banks have continued to be resilient in the face of the economic crisis that is confronting the most populous black nation in the world. Amid rising expenses due largely to high cost of energy, weakening Naira, insecurity, among other factors, leading lenders in the economy (Zenith Bank Plc, Access Corporation Plc, United Bank for Africa Plc, GTCO Plc and FBN Holdings Plc), increased their profit by average of 16.5 percent and increased lending (loans and advances) to their customers to N16.99 trillion, up 14.03 percent in the nine months financial period ended September 30, 2022. BAMIDELE FAMOOFO reports.
A review of the third quarter unaudited financial performance of leading banks in the Nigerian economy, carried out by the board of analysts of The Point Newspaper at the weekend showed that the banks: Zenith Bank, UBA, GTCO, FBNH and Access Corp are not stagnated by the hazy economic weather of the country as they still managed to deliver sumptuous profit for their shareholders.
For the shareholders of these leading five banks, the prospect for a reasonable dividend from their investments at the end of the financial year ending December 31, 2022 is bright as revenue and profit increased appreciably as at the end of third quarter with Earnings per Share on the rise.
Aggregate Performance
Profit Analysis
On the aggregate, based on the unaudited financial reports for nine months period ended September 30, 2022, made available to their investors and stakeholders on the platform of the Nigerian Exchange Limited, recently, the five banks reported a joint profit of N649.02 billion, representing an increase of 16.5 percent (average) compared with N557.33 billion posted by the leading banks at the end of the third quarter period in 2021.
Breakdown of how the banks stood on the profit chart showed that FBN Holdings Plc emerged the most aggressive among the five.
Though the bank recorded the least profit in absolute terms, it increased its net profit by 123.5 percent, from N40.85 billion in Q3-2021 to N91.29 billion in Q3-2022.
Zenith Bank Plc, however, was the most profitable bank in value terms with N174.33 billion, up 8.6 percent against N160.59 billion declared in the third quarter of 2021.
Meanwhile the bank recorded the second least growth in profit among the top five banks in the review period, coming ahead of GTCO Plc which grew its profit by 0.7 percent, from N129.4 billion in third quarters of 2021 to N130.35 billion in the review period.
Access Corp and UBA Plc occupied the second and third positions on the profit table, with N137.01 billion and N116.04 billion, respectively.
Operating expenses
There is evidence to show that rising inflation in the economy is taking its toll on the performance of the banking industry as average Operating Expenses of the five banks suppressed the growth in profit. Figures analyzed by the board of analysts of The Point showed that the leading banks recorded an increase of 21.5 percent in OPEX in the review financial year period as against an average growth of 16.5 percent in profit.
Access Corp recorded the highest growth in operating expenses at 29.5 percent, recording N376.92 billion as against N291.1 billion in Q3-2021.
GTCO recorded the least growth in OPEX, printing N139.44 billion as against N123.74 billion in Q3-2021, representing 12.7 percent.
UBA Plc was next after Access Corp on the OPEX chart with a 27.5 percent growth, from N206.01 billion in third quarters of 2021 to N262.63 billion in third quarters 2022.
Loans and advances portfolio
The five biggest banks in Africa’s largest economy, notwithstanding the increasingly difficult business operating condition in the country are not relenting in fulfilling their mandate to lend to customers as their gross loans and advances portfolio in the review period stood at N16.99 trillion as against N14.9 trillion recorded in the same period of 2021. FBN Holdings was more bullish in lending in the period with a 24.9 percent growth year on year in loans and advances portfolio. The bank gave out about N3.6 trillion to its customers as at nine months ended September 2022 compared with N2.9 trillion in 2021.
In absolute terms, however, Access Corp led the pack with N4.62 trillion (loans and advances to customers), up 11.1 percent when compared with N4.16 trillion doled out in the same period in 2021.
Zenith Bank and UBA followed Access Corp on the chart with about N3.88 trillion and N3.05 trillion, respectively. GTCO, being the most conservative with approving loans and advances to its customers, grew its portfolio by 2.2 percent year on year from about N1.8 trillion in Q3-2021 to N1.84 trillion in Q3-2021.
“For the shareholders of these leading five banks, the prospect for a reasonable dividend from their investments at the end of the financial year ending December 31, 2022 is bright as revenue and profit increased appreciably as at the end of third quarter with Earnings per Share on the rise”
Deposits portfolio
The five banks mobilised about N34.12 trillion as deposits from their customers in nine months, representing an aggregate growth of 15.08 percent year on year, when compared with N29.65 trillion collected in the same period in 2021.
Zenith Bank was more daring in driving deposits with 24.3 percent growth year-on- year to about N8.04 trillion from N6.47 trillion in Q3- 2021.
Meanwhile, Access Corp has the most robust deposits portfolio as at September 30, 2022 with about N8.19 trillion in its kitty as against N6.95 trillion in third quarters of 2021.
FBN Holdings Plc was the second biggest deposits driver in the review period with a year-on-year growth of 12.8 percent, from about N5.85 trillion in Q3-2021 to N6.6 trillion in the review period.
UBA Plc and GTCO recorded about N7.03 trillion and N4.26 trillion deposits in the review period.
Asset ranking
Access Corp was Nigeria’s biggest bank by asset size as at September 30, 2022, with about N13.45 trillion in its kitty. It grew its assets portfolio by 14.6 percent year-on- year, from N11.73 trillion in nine months 2021.
However, Zenith Bank is playing a catch up game on Access Corp with an aggressive growth of 20 percent year on year, in Asset in the review period. The bank had about N11.34 trillion in its Asset portfolio as at September 30, 2022 as against N9.45 trillion in 2021. FBN Holding’s Asset Portfolio stood at about N9.85 trillion in the review period while UBA Plc and GTCO followed with about N9.32 trillion and N5.81 trillion, respectively.
Individual Performances
FBN Holdings Plc
Interest income grew by 42.4 percent y/y to N370.36 billion as all contributory lines save for the income from loans and advances to banks (-19.9% y/y to N19.21 billion) recorded higher revenue.
Specifically, income from loans and advances to customers grew by 47.0 percent y/y, supported by the HoldCo’s risk asset creation during the period, evidenced by the 24.9 percent YTD rise in loans and advances to its customers to N3.60 trillion.
Likewise, income from investment securities increased by +54.9 percent y/y to N80.45 billion, despite the decline in the bank’s investment securities (-4.6% YTD to N2.89 trillion).
The bank attributed the increase in the income from investment securities to the attractive yields in the fixed-income market.
The HoldCo’s non-interest income (NII) increased marginally by 1.8 percent y/y to N156.99 billion, aided by the gains from other income (+32.1 percent y/y to N15.03 billion) and fees and commission (+5.9 percent y/y to N91.00 billion).
However, on the flip side, the lower income generated from FX (-63.9 percent y/y to N2.14 billion) and investment securities (-4.4 percent y/y N48.83 billion) trading slowed the growth in NII. Consequently, the operating income grew by 31.0 percent y/y to N369.82 billion.
Zenith Bank
Impressively, the bank reported a +26.5 percent y/y increase in interest income to N390.76 billion, supported by the higher income from investment securities (+30.0 percent y/y to N122.97 billion) and loan and advances to customers (+26.3 percent y/y to N261.25 billion).
The increase in income from investment securities was driven by the (1) elevated rates in the environment and (2) increase in investment securities (+16.5 percent YTD to N3.57 trillion). In addition, the increase in income from investment securities is due to the bank’s increased appetite for risky assets, given as the loan to customers expanded by 15.6 percent YTD to N3.88 trillion.
Interest expense grew by 45.5 percent y/y to N107.85 billion as all the contributory lines increased during the period due to the bank increasing its total liabilities by 22.8 percent YTD to N10.03 trillion. Similarly, non-interest income (NII) rose by 10.0% y/y to NGN211.97 billion, underpinned by the growth in the income generated from fees and commission (+27.8% y/y to NGN100.06 billion) and gains on investment securities (+0.9% y/y to NGN91.44 billion). This expansion in NII, alongside the growth in net interest income, led to a 14.8% y/y increase in operating income to N457.78 billion.
UBA
The bank’s interest expense expanded by 20.3 percent y/y to N137.72 billion as all contributory lines save for the cost on interest-bearing borrowing (-28.6 percent y/y to N20.53 billion) recorded gains – expenses on deposits from financial institutions (+155.1 percent y/y to N17.16 billion) and deposits from customers (+26.4 percent y/y to N99.23 billion). We highlight that the expansion in the cost of deposits is due to the 10.4 percent YTD and 19.6 percent YTD increase in the bank’s deposits from customers and financial institutions, respectively.
Accordingly, net interest income settled at N282.51 billion, translating to a +23.2 percent y/y growth. Consequent to the 299.0 percent y/y increase in credit impairment charges, the net interest income ex-LLE expanded by 19.4 percent y/y to N268.93 billion.
Similarly, non-interest income rose by 29.1 percent y/y to NGN131.20 billion due to the higher gains from trading investment securities (+182.1 percent y/y to NGN23.24 billion) and foreign exchange (+14.7 percent y/y to N40.77 billion) lines.
The aforementioned, coupled with an increase in the net income from fees and commission (+21.1 percent y/y to N82.22 billion), offset the N25.61 billion loss from FX revaluation.
“The five banks mobilised about N34.12 trillion as deposits from their customers in nine months, representing an aggregate growth of 15.08 percent year on year, when compared with N29.65 trillion collected in the same period in 2021”
Access Corp
Access Holding Company Plc also known as Access Corporation, reported a gain of N350.71 billion from loans and advances given out to their customers in the financial period ended September 30, 2022.
Year on year, growth stood at 34.3 percent. Interest income rose by 21.5 percent y/y to N571.98 billion, aided by higher gains from loans and advances to customers.
Breakdown of interest income showed that cash and balances with banks stood at N8.27 billion, loans and advances to banks (+8.0% y/y to N12.38 billion), and investment securities (+4.6% y/y to N200.62 billion). Like other tier 1 names, drivers for the expansion in ACCESSCORP’s interest income are attributed to (1) risk assets creation as the loan and advances to customers grew by 11.1 percent YTD to N4.62 trillion and (2) an expansion in yields across the FI market.
The HoldCo’s operating expenses advanced by 29.5 percent y/y to N376.92 billion, as all the contributory lines – AMCON levy (+27.0% y/y to N52.73 billion), personnel expenses (+25.1% y/y to N89.84 billion), depreciation & amortization (+7.8% y/y to N32.74 billion), and deposit insurance premium (+5.0% y/y to N15.91 billion) – increased during the period.
GTCO
Guaranty Trust Holding Company Plc (GTCO) has released its unaudited result and accounts for nine months ended September 30, 2022 with N169.7billion profit before tax, an increase of 12 percent from N151.9billion recorded in the corresponding nine months ended September 2021.
The financial institution in its announcement on the Nigerian Exchange Limited reported N130.35billion profit after tax in nine months of 2022, representing an increase of 0.73per cent from N129.4billion reported in nine months of 2021.
Strong Capital Ratios and asset quality were sustained as CAR, NPL ratio, and Cost of Risk (COR) closed at 20.7per cent, 5.6per cent, and 0.2per cent in September 2022 from 23.8per cent, six per cent, and 0.5per cent in December 2021, respectively.
