UBA, Access Bank, 10 Others Beats Analysts Forecast, Rakes in N334bn Profit in Q1

Kayode Tokede

Despite the global and domestic economy challenges,12 Nigerian banks reported N334 billion profit before tax in the first quarter ended March 31, 2022, an increase of 13.7per cent from N293.5 billion reported in the first quarter of 2021.

Analysis of the banks’ profit & loss figures showed 10.4 per cent increase in profit after tax to N281.56 billion in the quarter under review from N255.07 billion reported in Q1 2021. 

The banks unaudited financial statement for Q1 showed impressive profitability growth amid hike in total operating expenses and provisions for bad loans.

The 12 banks are; Access Holdings Plc, United Bank for Africa (UBA) Plc, Zenith bank Plc Ecobank Transnational Incorporated (ETI), Guaranty Trust Holding Plc (GTCO) Plc,

Others include; Union Bank for Nigeria Plc, Stanbic IBTC Holdings Plc, FCMB group Plc, Wema Bank Plc, Sterling Bank Plc, Fidelity Bank Plc and Jaiz Bank Plc.

Meanwhile, it was learnt that UBA, Zenith Bank and Access Holdings surpassed analysts profit before tax forecast for the period under review.

Of all the 12 banks, only Union Bank of Nigeria reported decline in profit before tax.

The breakdown showed that Zenith bank grew profit before tax by 11 per cent to N67.99 billion in Q1 2022 from N61.92 billion reported in Q1 2021, as Access Bank grew profit before tax by 8.5 per cent to N65.12billion in Q1 2022 from N60.05billion in Q1 2021. 

In the same vein, UBA reported about 10 per cent increase in profit before tax to N44.48 billion in Q1 2022 from N40.58 billion in Q1 2021, while GTCO reported marginal increase of 1.12 per cent growth in profit before tax to N54.29 billion in Q1 2022 from N53.68 billion in Q1 2021. 

Zenith bank in a statement expressed that the growth in profit was achieved by a year-on-year (YoY) growth in gross earnings of 22per cent from N157.3 billion reported in Q1 2021 to N191.5 billion in Q1 2022. 

According to the bank, “This double-digit growth in the topline also spurred our bottom line as the Group recorded an 11per cent YoY increase in profit before tax, growing from N61 billion in Q1 2021 to N68 billion in Q1 2022. 

“Profit after tax also grew by 10per cent from N53.1 billion to N58.2 billion over the same period. Topline growth was mainly driven by the growth in interest income, fees on electronic products and trading income.”

However, ETI’s profit before tax grew significantly by 29 per cent to N52.07billion in Q1 2022 from N40.58billion in Q1 2021. 

The Chief executive officer, Ecobank Group, Ade Ayeyemi stated that the performance was achieved in a difficult operating environment characterised by the strengthening of the US dollar against local operating currencies, high inflation, high interest rates and tight labour markets across Africa as the Russia-Ukraine conflict continued to take its toll. 

“Despite these challenges, we continued to support our customers effectively, which paid off as our businesses grew their revenues and profits. These were driven by trade, cash management, FICC and payments, while we also achieved modest loan growth with support from higher interest rates.”

The Chief Executive officer, Sterling bank, Mr. Abubakar Suleiman in a statement expressed that 2022 commenced with great expectations for growth globally on the back of the recovery achieved in 2021.

According to him, “However, the outbreak of conflict in eastern Europe had resulted in elevated energy prices, stoked inflation globally and undermined the expected pace of economic growth In Nigeria, this development in addition to supply chain disruptions impacted prices further and resulted in rising inflation

“Despite the macroeconomic setbacks, our business showed remarkable resilience as we adapted to our new environment and continued to deliver value to all stakeholders Our customer centric strategy has enabled us to continue to support our partners through innovative product offerings.”

On its part, Union bank of Nigeria that reported 9.6 per cent to N5.84 billion profit before tax in Q1 2022 from N6.46billion in Q1 2021 was the only bank with decline in profit before tax. 

The Chief executive officer, Union Bank of Nigeria, Mr. Emeka Okonkwo in a statement said the bank in 2022 renewed its focus on turbocharging productivity and ensuring fully leverage the strength of its digital channels, regional network and talent to maximise the bottom line.

During the period under review, Wema Bank grew profit before tax by 119 per cent to N3.3billion in Q1 2022 from N1.15billion in Q1 2021 as Stanbic IBTC Holdings reported N19.6billion profit before tax in Q1 2022 from N12.14billion in Q1 2021. 

Analysis of other banks results showed that FCMB group generated N6.02billion profit before tax in 2022, an increase of 42.4billion in Q1 2022 from N4.23billion in Q1 2021; Sterling Bank reported N3.5billion profit before tax in Q1 2022 from N2.4billion in Q1 2021; Fidelity Bank grew its profit before tax by 1.9per cent to N10.3billion in Q1 2022 from N10.13billion in Q1 2021 and Jaiz Bank reported 11 per cent increase in profit before tax to N1.09billion in Q1 2022 from N979 million reported in Q1 2021. 

Commenting on the unaudited result and accounts by listed banks, the Managing Director, ARM Securities Limited, Mr. Rotimi Olubi said: “Interest income has been a major drivers of earnings across all banks. We have seen a significant increase in banks interest income due to rise loans from customers and institutions. “

He noted that there was increase in banks gross earnings across all banks as a result of recovery from the covid-19 pandemic. 

He explained further that, “Also, it is worthy to note that interest expenses is growing at a sharper rate than interest income. This is based on the fact that banks are paying more in terms of cost of funds deposited with them. 

“This last means that banks are paying higher on a unit basis in terms of the deposit in their position as against the amount they are receiving from loans interest. Also, banks are now seeing a rise in non-interest income which is a strategic move on their part.”

The Chief Operating Officer, InvestData Limited, Mr. Ambrose Omordion told THISDAY that the Q1 2022 results is a reflection of economy recovery in Nigeria post-covid-19.

According to him, “The performance showed the local economy is not doing bad in the Q1 2022 as projected by the World Bank. Banks been the cash flow of the economy have performed beyond expectations.”  

Speaking from a shareholder’s perspective, Chairman of the Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie noted that Nigerian banks have proven to be resilient in growing profits and savings from customers despite domestic and global challenges. 

He said, “It is a good thing that Nigerian banks are still resilient and are doing very well despite economy challenges. The resilient is what foreign investors are seeing in our banks and are taking position. The Q1 2022 performance is encouraging and with the growth, shareholders are expecting higher dividend in 2022 FY.”

He said that tension towards the 2023 general election would decide the fate of Nigerian banks sustained performance and dividend payout to shareholders in 2022 FY.