Economic recovery: UBA, Fidelity Bank, 10 others generate N578.9bn profit in six months
…Zenith Bank maintains ‘Most Profitable Bank in Nigeria’
…3 banks record drop in profit
By Alao Matthew & Kayode Tokede
With the steady increase in the nation’s economy, a total of 12 banks generated N578.93billion profit before tax in first half of 2021, an increase of six per cent from N547.86billion reported in first half of 2020.
This performance of banks in Nigerian economy confirmed the increase in Nigeria’s Real Gross Domestic Product (GDP) by 5.01per cent YoY in second quarter (Q2 2021) from 0.51per cent in Q1 2021according to a recent report by the National Bureau of Statistics (NBS) .
The report by NBS had stated that financial Institutions under financial and insurance sector contracted by -4.54 per cent in the Q2 2021 from 0.15 per cent in the Q1 2020 and 28.41 per cent in Q2 2020.
The report by NBS is contrary to profit declared by these banks in the first half of 2021 as the apex banking regulating bodies have insisted that the Nigerian banks are safe and sound following its strong financial indicators.
According to Nigerian NewsDirect findings, only four banks out of the 12 investigated banks recorded decline while, Fidelity Bank Plc recorded the most outstanding performance with about 72.4 per cent increase in profit before tax to N20.63billion in H1 2021 from N11.96billion in H1 2020.
Nigerian NewsDirect can also report that Zenith Bank with N117.06billion profit before tax in H1 2021 from N114.12billion in H1 2020 is the most profitable bank in Nigeria.
The management of Zenith Bank in a statement said it is well-positioned to leverage on technology to expand the retail footprint to deliver improved returns to stakeholders.
The likes of Access Bank plc, Ecobank Transnational Incorporated and United Bank for Africa (UBA) recorded double-digit increase in profit before tax in the period under review.
For instance, Access bank report before tax grew by 31.2 per cent to N97.49billion in H1 2021 from N74.31billion in H1 2020, while ETI’s profit before tax rose by 33 per cent to N85.3billion in H1 2021 from N64.13billion in H1 2020.
UBA’s profit also grew by 33.4 per cent to N76.2billion in H1 2021 from N57.13billion in H1 2020.
However, FBN Holdings reported 9.2 per cent increase in profit before tax to N45.24billion in H1 2021 from N41.42billion in H1 2020.
The Group Managing Director, FBN Holdings , U.K. Eke in a statement said, “FBNHoldings delivered a resilient performance in the half year, reflective of our focus on strengthening the organisation in recent years. We remain committed to our strategic objective of driving further stability in performance, as well as delivering sustainable growth over the years to come.
“In line with our focus on revenue diversification, we continue to grow our non-interest income as we progressively become a more transaction-led institution and implement innovative and technological driven measures to improve overall efficiency.
“The macro and socio-economic conditions remain challenging given the COVID-19 pandemic and the lowinterest rates environment.
“While these points negatively impacted overall revenue generation, we are confident that FBNHoldings can navigate this challenging operating environment and keep delivering sustained innovative solutions that enrich customer experience as well as deepen financial inclusion.”
Further findings revealed that Guaranty Trust Holdings Plc , Stanbic IBTC Holdings Plc, FCMB Group Plc, and Union Bank of Nigeria recorded decline in profit before tax.
Stanbic IBTC Holdings had the worst performance in profit before tax in H1 2021, dropped by 53 per cent to N24.71billion in H1 2021 from N52.41billion in H1 2020.
After Stanbic IBTC was FCMB Group Plc with about 20 per cent drop in profit before tax to N8.91billion in H1 2021 from N11.07billion in H1 2020 as GTCO’s profit before tax was down by 15,2 per cent to N93.06billion in H1 2021 from N109.7billion in H1 2020.
The Group Chief Executive Officer of Guaranty Trust Holding Company, Mr Segun Agbaje in a statement had said, “The results reflect our commitment to building on our track record of solid financial performance, and our capability to constantly innovate will ensure we stay ahead of the curve at all times.
“We are counting on the enduring support of our loyal customers and the hard work of our dedicated staff to continually make end-to-end financial services easily accessible to everyone and to create the best outcomes for all our customers and the communities in which we operate.”
He further stated that; “Looking forward, we are focused on bringing to bear the full benefits of our new corporate structure by consolidating our leading position in all the economies where our franchise operates.
“We will also diversify our earnings from core banking, continue to empower businesses across Africa and beyond, and generate long-term returns for our shareholders.”
In conclusion, Union Bank of Nigeria reported about 11 per cent drop in profit before tax to N10.33billion in H1 2021 from N11.6billion in H1 2020.
The Managing Director, Highcap Securities Limited, Mr. David Adnori explained to our correspondent that the impressive H1 results by listed companies on the Nigerian Exchange Limited (NGX) is not a surprise.
According to him, “It’s not surprising because if you look at the COVID-19 lock down of last year, banks were not affected as they continue operating uninterrupted aside from the few destruction in areas of the country where there are wars.
“So, other than this, they have been operating very well and declaring impressive profit. They all make a good profit before tax in the first half of the year and so they are able to declare interim dividend.”
Speaking from shareholders perspective, the National Coordinator Emeritus, Independent Shareholders Association of Nigeria (ISAN), Sunny Nwosu said shareholders applaud the banks for growing profit and declaring dividend in the period under review.
He added that, “In my opinion it’s a cheering news that banks were able to report profit despite the economy challenges.
“So, it’s a clear indication that at the end of the year, banks will sustain growth in profit and we are also going to benefit from dividend at the end of the year despite the political and economic problems that we are facing.”
Also reacting, the Chairman, Progressive Shareholders Association of Nigeria, Boniface Okezie said, “I think banks are trying their best in declaring impressive profit and interim dividend.
“The results declared by banks appreciated in profit as they have defected all odds.
“The weak performance in the economy has not deter the banks from performing because what you need is to be focused and have a business strategy.
“If your focus and reposition your business, you should be to make good profit which the banks have shown resilience despite the wobbling economy.
“That means the government needs to take clue from the private sector and that means the economy is not going to be government-driven. If the government can follow that lead, the economy would have been performing better than what we have
“The better manager of economy is the private sector as they have created jobs.
“The government has been placing heavy taxes on the private sector which are not for the betterment of Nigerians who are still wallowing in poverty.”
The Central Bank of Nigeria reiterated that the banking sector remained resilient and continues to be the major channel for supporting the domestic economy.
The Deputy Governor, Financial System Stability, CBN, Aisha Ahmad, in her personal statement in July said, “Whilst noting the satisfactory performance of the financial system, the Bank must remain vigilant and proactively manage operational, asset quality and other risks to financial system stability, especially with the lingering impact of the COVID-19 pandemic.
“The Bank is also advised to increasingly consider Environmental, Social and Governance risk factors and ensure their integration into its policy tool kit given recent unprecedented extreme weather conditions and frequent natural disasters being witnessed across the globe.”
