2022 FYE: Five Big Banks Stand Firm Despite Economic Headwinds

•Hold combined total assets of N58tn, N1.1trn profits

Kayode Tokede

A total of five of Nigeria’s Systemically Important Banks (SIB) resisted domestic and external economic challenges to declare impressive 2022 financial performance that led to dividend pay out to shareholders.

The five big banks whose 2022 full year-end (FYE) financial statements were assessed by THISDAY included Access Holdings Plc, Zenith Bank Plc, Guaranty Trust Holding Company Plc (GTCO), Ecobank Transnational Incorporated and United Bank for Africa (UBA).

FBN Holdings, the parent company of FirstBank, one of the country’s tier-1 banks is yet to release its full year results.

But the aforementioned five banks all raked in combined profits before tax of N1.1 trillion as at December 2022. This was an increase of 6.9 per cent, compared with the combined profits of N1.03 trillion recorded by the five banks in 2021.

The breakdown of profit before tax posted by the banks showed that UBA generated N200.88billion profit before tax in 2022, an increase of 31 per cent from N153.07billion in 2021; while Zenith Bank announced N284.65 billion profit before tax in 2022, a growth of 1.5 per cent from N280.37billion in 2021.

Also, while ETI declared N230.56 billion in 2022, from N195.72 billion in 2021, GTCO posted N214.155billion profit before tax from N221.5 billion in 2021 and Access Holdings declared N167.68 billion profit before tax in 2022 from N176.58billion in 2021.

These five banks also collectively hold a whopping sum of N57.96 trillion in total assets, which was about 78.76 per cent of the industry assets that closed 2022 at N73.59 trillion.

In terms of total assets, Access Holdings with its African expansion topped the chart as the biggest bank by total assets, followed by ETI and Zenith Bank. Precisely, Access Holdings declared N15 trillion total assets in 2022, an increase of 28 per cent from N111.73trillion reported in 2021. For ETI, its total assets increased to N13.37trillion in 2022, up 14.4 per cent from N11.69 trillion in 2021, while Zenith Bank declared N12.29trillion in total assets, a growth of 30 per cent from N9.45trillion in 2021.

The 2022 results came on the heels of global economy that is faced with so much uncertainty. This was even worsened by two bank failures in the United States – Silicon Valley Bank and Signature Bank, and in Switzerland, Credit Suisse also failed before it was acquired by rival UBS.

Others challenges the industry had to content with included Ghana’s debt crisis that is affecting companies beyond its borders, central banks hiked interest rates to combat inflationary pressures (particularly energy & food) and ongoing Ukraine/Russia, have remained concerns for financial stability.

Double-dight inflation due to higher food and energy prices; tension towards the 2023 general elections; FX scarcity that eventually led to crash in forego exchange, were among domestic headwinds Nigeria’s economy faced in 2022.  

However, despite these headwinds, the five banks declared a significant increase in customer loans and advances and deposits.

For instance, Access Holdings, again led other banks in loans and advances to customers as it granted N5.1trillion in 2022, an increase of 23 per cent from the N4.16 trillion reported in 2021. ETI came close with N5.07 trillion loans and advances to customers in 2022, 25 per cent higher than N4.06 trillion loans granted to customers in 2021.

At N9.6 trillion, ETI led other big banks in deposits from customers, followed by Access Holdings that grew its deposits from customers to N9.25 trillion in 2022, from the N6.95 trillion reported in 2021.

Stakeholders and analysts lauded the 2022 corporate earnings and dividend pay-out, among others, by the big banks, stating that financial institutions in Nigeria are resilient to overcoming domestic and foreign challenges and declared dividend from their earnings.

The Group Chief Executive Officer of GTCO, Mr. Segun Agbaje, noted that, “Despite the varying challenges and headwinds that weighed on growth in 2022, we were determined to deliver a decent performance and scale effectively to strengthen our competitive edge and drive long-term growth.”

While commenting on the pan-African bank performance in 2022, the CEO of Ecobank Group, Jeremy Awori, said, “Ecobank’s strong 2022 performance reflects the strength of our diversified business model, growth momentum and efficiency, and was achieved despite operating in a challenging macroeconomic environment, which also included the difficulties that Ghana’s debt restructuring exercise placed on us.”

Speaking with THISDAY, the Chief Research Officer, InvestData Consulting Limited, Mr. Omordion Ambrose, said the 2022 performance of the companies were impressive and their dividend returns more attractive when compared to yields on money market instruments.

“From the Tier-1 results we have seen so far, Zenith Bank proposed N3.10 final dividends and UBA declared N1.1 dividend pay-out on the NGX. Access Holdings proposed N1.50 total dividends, while GTCO announced N3.10 total dividend pay-out to shareholders.

“Some companies’ dividend pay-out to investors were flat to undermine how the operating environment was challenging in 2022.

“Some of these companies over the years have been consistent in generating profit and dividend pay-out to shareholders. Their 2022 performance is commendable and it shows how resilient these banks are despite challenges.”

For his part, the Chairman Progressive Shareholders Association (PSAN), Boniface Okezie, stated that despite economic hardship, some quoted companies reported impressive performance.

According to him, “As we have seen from their performance, there is resilience in the corporate world which means there is hope for our domestic economy. Those in the private world have put more handwork, and diligence in growing profit and declared dividend in their move to give back to shareholders.”

“These firms pay heavily for security and infrastructure which is not their duty.”

“Beyond valuation, dividend-paying stocks can be a good source of stable income streams.  Many investors will want to invest in companies with a history of growing dividend and the likes of Zenith Bank, UBA and Access Holdings, ETI, and GTCO over the years have sustained dividend pay-out to investors,” he added.