Amid high interest rates, Zenith, GTCO, Ecobank, others post N4.2trn profit
By Seun Ibiyemi
In the first nine months of this year, 10 Deposit Money Banks in Nigeria collectively generated approximately N4.20 trillion, according to an analysis of their quarterly financial reports.
The banks listed on the Nigerian Exchange Limited saw a significant 102.81 percent rise in profits, reaching N4.20 trillion from N2.07 trillion recorded at the end of the third quarter in 2023.
The banks in this analysis include major institutions such as Zenith Bank, Guaranty Trust Holding Company, AccessCorp, United Bank for Africa, and FBN Holdings.
Others are Stanbic IBTC Holdings, Sterling Bank, Ecobank, Wema Bank, and Jaiz Bank.
This profit surge is occurring amid a high-interest-rate environment. Throughout the year, the Central Bank of Nigeria (CBN) has consistently raised the benchmark interest rate at each of its five Monetary Policy Committee meetings. So far, the CBN has increased the rate from 18.75 percent at the start of the year to 27.25 percent in an effort to control inflation and stabilise the naira. High yields on fixed-income securities, primarily taken up by banks, have also boosted their bottom lines.
A major driver behind this profit growth is the increase in interest income, as reflected in the financial statements released to the NGX. Nigeria’s four largest banks by market value—GTCO, Zenith Bank, UBA, and FBN Holdings—all reported net interest income more than doubling over the period. Access Bank, the country’s largest bank by assets, saw its net interest income rise by 116.65 percent , reaching N844.84 billion from N389.96 billion the previous year.
Among the banks, GTCO reported the highest profit at N1.09 trillion, marking a 195% increase from its September 2023 figure. Following GTCO, Zenith Bank posted a profit after tax of N827.28 billion, nearly doubling the N434.17 billion it earned the previous year. FBN Holdings saw profits rise to N533.88 billion from N236.42 billion, UBA reported a profit of N525.31 billion, Ecobank achieved N491.88 billion, and Access Bank earned N457.75 billion.
Other banks also reported strong profit growth. Stanbic IBTC Holdings posted a profit of N182.87 billion, up from N109.249 billion. Sterling Financial Holding Company and Wema Bank both saw profits increase significantly, recording N27.45 billion and N52.73 billion, respectively. Non-interest bank Jaiz Bank reported a 182.39 percent rise in profit after tax to N18.11 billion, up from N6.41 billion.
While these banks benefit from the high-interest-rate environment, the Organised Private Sector (OPS) has raised concerns about the impact of sustained rate hikes on their operations. Following the CBN’s fifth rate hike this year, members of the OPS expressed fears that higher interest rates could lead to more bad loans within Deposit Money Banks.
National President of the Association of Small Business Owners of Nigeria, Dr. Femi Egbesola expressed concern, noting that manufacturers and the real sector are already grappling with rising operational costs.
“This will push up the cost of doing business and, ultimately, the cost of goods and services,” he said. “The manufacturing sector may contract further as liquidity and profitability decrease, leading to potential defaults on loans.”
The Lagos Chamber of Commerce and Industry (LCCI) echoed these concerns, urging the government and CBN to adopt a balanced approach to monetary policy. While controlling inflation is essential, the LCCI noted that mitigating negative impacts on business operations and economic growth is equally important. The chamber recommended that the government increase capital expenditures to stimulate business activities and support economic growth.
