How Seven Banks’ Q3 Profit Surpassed GDP Growth Rate

DESPITE a sluggish economy, difficult operating environment, increased competitive intensity, currency devaluation and other macroeconomic challenges that continue to place roadblocks to businesses, seven Deposit Money Banks (DMBs) recorded impressive 15 per cent growth in Profit Before Tax (PBT) for third quarter (Q3) 2021. 

Analysis of the combined PBT of the banks show that the seven lenders’ PBT growth towered above the country’s Gross Domestic Product (GDP), which grew at 4.03 per cent between July and September. 

The banks that announced their unaudited results for the nine months period ended 30 September 2021 grew PBT to N495.772 billion from N431.347 billion recorded in the corresponding period of 2020. Breakdown of the DMBs show that Access Bank’s PBT grew by 16 per cent to N135.072 billion in Q3, 2021 from N116.623 billion in the corresponding period of last year. 

The unaudited results of Zenith Bank Plc, for the nine months period ended 30 September 2021, showed a PBT of N180 billion, reflecting about one per cent growth over the N177 billion recorded in the same period in the previous year. 

Also, Union Bank’s unaudited results released to the Nigerian Exchange (NGX) Limited showed a profit before tax of N16 billion for Q3’21 as against N15.9 billion in Q3’20. The Sterling Bank Group posted a profit before tax of N9.861 billion for third-quarter 2021, which is N1.837 billion higher than N8.024 billion made in 2020 of the same period. 

In the same vein, UBA reported a 37 per cent increase in PBT to N123.4 billion, compared to N90.4 billion recorded at the end of the third quarter of 2020, Another lender in the row is Jaiz Bank which recorded a 54 per cent growth in PBT from N2.1 billion in September 2020 to N3.3 billion in September 2021. Coming next to Jaiz is Fidelity Bank, which PBT soared by 31.4 per cent to N28.1 billion from N21.3 billion in 9M’2020. 

In another development, Nigerian Tribune findings from the half year (H1) financial results of 14 leading banks listed on the Nigerian Exchange Limited show that the banks recorded positive performance in Profit Before Tax, which grew by 5.1 per cent to N573.7 billion in H1’21 from N545.7 billion in H1’20. 

This performance according to analysts, was in tandem with the five per cent GDP growth rate in second half, but inflation at 17.75 per cent in HI’20 eventually put pressure on banks’ profit growth rate. 

The 14 banks include Tier-1 and Tier-2 banks. Tier- 1 banks are First Bank Nigeria Plc, Zenith Bank Plc, Access Bank Plc, Guaranty Trust Holding Company (GTCO) Plc and United Bank for Africa (UBA) Plc while Tier-2 banks are Union Bank Nigeria Plc, Sterling Bank Plc, Stanbic IBTC Plc, First City Monument Bank (FCMB) Plc, Wema Bank Plc, Unity Bank Plc and Jaiz Bank Plc. 

Also, gross earnings grew marginally by 2.9 per cent to N2.463 trillion from N2.399 trillion recorded in the corresponding period of 2020, H1 2020. This gives a significant under-performance against the 5.0 per cent recorded as the Gross Domestic Product, growth at 5.01 per cent.

Meanwhile, analysts attributed the mixed performances to a combination of factors such as Naira depreciation and rise in cost as they resumed full on-site operations unlike last year when most of the staff worked from home. 

They further noted that Tier- 2 banks were relatively better in terms of profit, especially Wema Bank, Unity Bank and Jaiz Bank, an indication that Tier- 2 banks are navigating the challenges of the macroeconomic environment more efficiently. 

In the area of growth in assets, despite the prevailing harsh economic climate, eight of the DMBs in the country grew their total assets by 10.08 per cent to N39.58 trillion in the first nine months of the year, from N35.95 trillion at the end of December 2020, the lenders’ 2021 9M unaudited financial statements show. 

The DMBs are Zenith Bank, Access Bank, Guaranty Trust Holding Company (GTCO), United Bank for Africa (UBA), Union Bank, Stanbic IBTC, Wema Bank and Unity Bank.

  • Tribune

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