Banks Generate N2.03tn Profit in 3-months, On Course for Record N8tn PBT in 2024FY

Kayode Tokede

Nigerian banks are on course to double their profit in 2024 as improving operating efficiency and aggressive market expansion continue to uplift banks above macroeconomic challenges such as; include double-digit inflation rate and unstable naira at the foreign exchange market. 

Industry data showed that commercial banks and their holding companies recorded profit before tax of about N2.03 trillion in the first quarter (Q1) of 2024, almost half of about N4.4 trillion recorded in 2023 full year.

Annualised, banks’ total profit before tax could surpass N8.2 trillion in 2024, underscoring the resilience of the sector, which has become all-weather growth despite the often-volatile changes in the operating environment.

A THISDAY review market data showed that banks’ continued profitability is driven mainly by aggressive business growth, prudent risk management and diverse markets that mitigate shocks from national challenges.

Strong investments in information and communication technology (ICT) was the backbone for most banks, with digital banking contributing substantially to increasing incomes and profitability.

The Q1 2024 data for period ended March 31, 2024, obtained through regulatory filings and industry association, indicated that nearly all banks would record substantial growth in profit in 2024.

Although foreign exchange (FX) changes could moderate performance in the period ahead, many banks could hit N1 trillion profit this year, if they sustain the tempo of growth in the first quarter throughout the year.

As gathered by THISDAY, Guaranty Trust Holding Company Plc (GTCO), followed by Zenith Bank Plc, are the most profitable Nigerian banks.  

FBN Holdings is among the list of over 20 banks investigated by THISDAY, ranking third in profit before tax generation in Q1 2024.

GTCO reported N509.35 billion profit before tax in Q1 2024, about 587 per cent increase from N74.09 billion reported in Q1 2023, while   Zenith Bank declared N320 billion profit before tax in Q1 2024, about 270 per cent increase from N 86.81billion reported in Q1 2023.  

Group Chief Executive Officer, GTCO, Mr. Segun Agbaje in a statement had said: “Our first quarter results reflect the unfolding value of what we have created in all our business verticals through the Holding Company Structure – from Banking and Payments to Funds Management and Pension, we are positioned to compete effectively on all fronts and fulfil all our customers’ needs under a unified, thriving financial ecosystem. Despite the challenging operating environment, we delivered a solid performance, recording significant growth across all financial and non-financial metrics, and we remain on track to meeting our full year guidance.”

Agbaje further said: “Looking ahead, we will continue to focus on strengthening our relationships with our loyal customers, supporting not just individuals and businesses but also our communities through our well-attested free business platforms as well as innovative products and services.

“We are confident in our credentials to lead the future of financial services in Africa and will not relent in our commitment to excellence whilst delivering long-term value to all stakeholders.”

Zenith Bank in a statement stated that despite the challenging operating environment and tightening monetary policy stance, the Group reported strong year-on-year (YoY) growth of 189 per cent in gross earnings from N270 billion reported in the Q1 2023 to N781 billion in Q1 2024.

“The impressive growth in the top line resulted in profit before tax (PBT) of N320 billion in the Q1 2024, representing an increase of 270 per cent from the N87 billion reported in the Q1 2023.

“We are making progress on our planned capital raise to support future growth, and are optimistic that we will meet the minimum capital requirements under the CBN’s recapitalization directive. As we accelerate migration to our new technology architecture and also transition into a holding company, the Group remains poised to maximize value for all stakeholders,” the bank added in a statement.

For FBN Holdings, it declared N238.53 billion profit before tax in its unaudited Q1 2024 result and accounts, about 325.2per cent growth from N56.1 billion reported in Q1 2023.

The Q1 2024 result and accounts is a reflection of 2023’s impressive performance as one of the oldest banks in Nigeria sustained its fundamentals amid domestic and foreign challenges.  

From its Q1 2024 profit & loss figures, the Group declared N208.1 billion profit, about 315.8 per cent from N50.1 billion reported in Q1 2023.

The group announced N730.3 billion gross earnings in Q1 2024, an increase of 181.4 per cent from N259.5 billion in Q1 2023.

The Group Managing Director, FBN Holdings, Nnamdi Okonkwo in a statement had said, “FBN Holdings’ strong start to the year reinforces the confidence in achieving targets and delivering sustained value for our shareholders.

“Our commitment to optimising the Group’s earnings capacity and maximising operational efficiencies has again delivered outstanding results. Underpinned by strong revenue growth and improved operational efficiency, our key financial metrics have shown significant improvement. Remarkably, gross earnings grew 181.4 per cent to N730.3 billion, while profit before tax increased by 325.2 per cent to N238.5 billion while our total assets increased by 27.4 per cent in three months to N21.6 trillion.”

He added that the group remains focused on its strategic initiatives towards further improving profitability, enhancing excellence in performance and surpassing stakeholders’ expectations.

The Vice President, Highcap Securities Limited, Mr. Daviid Adnori stated that Nigerians banks are resilient and sound amid macro economic challenges.

He noted that the banking sector recapitalisation in 2024 is another major threat, assuring that Nigerian banks would raise the needed capital and expand operations.

Commenting on the sector recapitalisation, Investment banker and stockbroker, Mr. Tajudeen Olayinka stated that banks accessing the capital market to raise capital is welcome development, stressing that the stock market is ready to support banks in their quest to meet CBN requirements.

“The truth is that most banks may not be able to raise as much as they require from the stock market at this time because of high interest rate, among other factors. Ordinarily, banks could have raised as much as they required at a lower cost of equity and as it is now, they may have to consider a higher cost of equity.

“For that reason, some will have to go by the way of right issues and public offer like what Fidelity Bank is doing right now. The exercise will attract foreign investors and local investors are ever ready but may not show much interest due to weaker purchasing power,” Olayinka explained.

Speaking from shareholders perspective, the National coordinator, Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie welcomed banks decision to access the Nigerian capital market to raise capital amid CBN directives.

He said, “A bank like Fidelity Bank had made a move to raise fresh capital before the announcement of CBN as the management aimed at opening new branches, improving on Information Communication Technology and enhancing customer services.

“The banking sector recapitalisation during Prof. Charles Soludo regime as CBN governor reforms the sector and it could have been difficult for our banks to expand beyond Africa, Europe and Asia. The sector recapitalisation serves as a buffer and aid banks to support the real sector of the economy.”