…As Zenith Bank takes lead with N130.01bn
…Tax remains a major challenge for banks — Analyst
By Seun Ibiyemi & Philemon Adedeji
Nigeria leading financial institutions, Zenith Bank Plc, Access Holdings Plc, FBN Holdings Limited, United Bank of Africa (UBA), Guaranty Trust Holding Company plc (GTCO), Ecobank Transnational Incorporated (ETI) have overcome global and domestic macroeconomy challenges to post N591.4billion profit before tax in half year ended June 30, 2022.
This is 15 per cent increase from N514.24billion generated by the six Tier-1 banks in Nigeria.
The breakdown, according to Nigerian NewsDirect investigations revealed that Zenith Bank with 11.06 per cent increase in PBT to N130.01billion in H1 2022 from N117.06billion in H1 2021, led the banking sector in profit.
After Zenith Bank is ETI with N108.96billion PBT in H1 2022 from N85.32billion, followed by GTCO with nearly 11 per cent increase in PBT to N103.25billion in H1 2022 as against N93.06billion reported in H1 2021.
Access Holdings grew PBT by 0.4 per cent to N97.79billion in H1 2022 from N97.38billion recorded in H1 2021. UBA reported 12.6 per cent to N85.75billion in H1 2022 from N76.19billion in H1 2021, while FBN Holdings recorded N65.7 billion PBT in H1 2022, representing an increase of N45.24 billiion in H1 2021.
Major global economies remain fragile at post COVID-19 pandemic as H1 2022 saw a slew of Central Bank rate hikes, adopting monetary tightening measures amidst heightened inflationary pressures.
The Chairman, Progressive Shareholders Association of Nigeria, Boniface Okezie commended Nigerian banks for posting impressive PBT and interim dividend payout to shareholders, stressing that these companies stand out despite economic challenges.
According to him, “These companies have shown resilience despite domestic and global economic challenges. They have consistently declared interim dividend as their policy to reward shareholders, and we are delighted.
“Fidelity Bank interim dividend for the first time in over 30 years is a welcome development. The declaration of interim dividend by the management of Fidelity bank shows the growth of the bank and it’s poised to become a Tier-1 bank in Nigeria.”
The Group Chief Executive Officer, GTCO, Mr. Segun Agbaje, in a statement said, “Our results show an increase in key revenue lines and a strong performance in other financial metrics which reinforce our growth prospects as a leading financial services company.
“Our priority at the start of the 2022 financial year was to bring the group’s new businesses on-stream, starting strong with a focus on long-term viability. At present, we have successfully expanded our financial services ecosystem to include HabariPay Ltd, Guaranty Trust Fund Managers Ltd, and Guaranty Trust Pension Managers Ltd, and all of them are P&L positive.”
He further stated that, “These newly created businesses will operate alongside our flagship banking franchise to offer increased value to our growing customer base as well as other stakeholders. We will continue to build on our core strengths of service excellence, innovation, and flawless execution to deliver our corporate objectives for the year and further our vision of being Africa’s leading financial services institution.”
Also, UBA’s Group Managing Director/Chief Executive Officer, Mr. Oliver Alawuba in a statement said, “Our performance in the H1 2022 is in line with our expectations as the group grew gross earnings by 17.8 per cent, largely from double digit growth in both net interest and non-interest income.
“We have continued to leverage our Customer-1st philosophy to pursue the mission of providing superior value to our stakeholders. This is evident in the increase in low-cost customer deposits, and strong growth of our payments and transaction banking.
“The financial year 2022 showed initial signs of recovery of economies across the globe, despite continued COVID-induced supply-chain disruptions.
“However, geopolitical challenges including the Russia and Ukraine conflict, resulted in escalation of global commodity prices, particularly those of grains and crude oil, which have taken a toll on several economies. Notwithstanding these developments, our half-year numbers came out stronger than the prior year, with top and bottom-line reaching new record highs.
“The Group’s profitability increased by 12.6 per cent to N85.7 billion, with double-digit growth recorded across our key income line. We recorded a decent 20 per cent growth in our net interest income as we continued to moderate our cost of funds whilst improving yield on assets, thereby contributing to the strong 20 per cent growth in operating income.
“Our investments in state-of-the-art technology continue to yield expected results, evident in the huge boost of our digital banking income, which grew 22.7 per cent year-on-year to N36.3 billion. These gains have enabled us to optimize net earnings amid the accelerating inflationary pressure, currency devaluation, and increased regulatory induced cost.”
Commenting, the Group Managing Director, FBN Holdings Plc, Nnamdi Okonkwo in a statement said, “FBN Holdings continues to demonstrate resilient performance despite the challenging operating environment with an impressive improvement in revenue and profitability. For the half year 2022, gross earnings and profit before tax grew by 22 per cent y-o-y and 45 per cent y-o-y to N359.2 billion and N65.7 billion respectively. Furthermore, we continue to see good progress across our performance metrics, which remain in line with our focus on driving sustainable growth.
“The Group remains committed in its transformation drive, which has resulted in stronger balance sheet and better asset quality with non-performing loans closing at 5.4% at H1 2022. Similarly, risk management capability remains robust across the Group supporting the drive for enhanced earnings for sustainable capital accretion. During the period, cost to income ratio remained flat y-o-y despite the inflationary and currency pressure, as we continue to focus on optimising overall efficiency.
“Our strategic intent remains unchanged in optimising opportunities that drive growth in revenue, profitability, capital accretion and overall operational efficiency that delivers sustainable value to our stakeholders.”
In a swift response on tier 1 half year results, the CEO of Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said, “We need to realise that these are nominal figures. If we adjust for inflation, the performance may not be remarkable as it looks.
“The results also demonstrate the fact that the banking sector is not as vulnerable to current economic shocks as many other sectors of the economy.”
Also the Vice President of HIGHCAP securities LTD, David Adonri said, “All the banks mentioned in the analysis apart from WEMA Bank recorded over 10 per cent increase in their H1 2022 PBT.
“Perhaps the high cost of doing business affected WEMA much more severely. The banking sector in general has shown high degree of resilience to macroeconomic shocks.
“Their forex income together with the deepening of online business may have boosted their income and reduced costs.”
Also commenting on the results, an analyst, Mr Samuel Adeyeye said, “They actually had a fantastic result, with an interesting income which actually grew significantly for GTBank and Zenith Bank which I can remember.
“But the major problem of most banks now has to do with tax and the tax provision actually increased significantly and the major reason for this has to do with the expiration of tax exemption on government bonds and also on cooperate bonds and cooperate CP, (commercial paper), so because of that it has expired, so if one is holding a corporate bond and CMP before the income.
“So, because they have removed tax exemption now, they are now taxing them and a lot of these banks actually invest in the public bond, government bond and some other bonds that actually increase their tax provision significantly. For GTBank, their bottom line is declined marginally, but for Zenith Bank they were able to, even despite the higher task provision their net profit actually increased during the period.”