Tier-1 Banks Pull ₦775 Billion Profits as Total Assets Hit ₦30 Trillion
Despite the slow growth in the economic, Tier-1 Banks were able to make the earnings season an impressive one.
The financial year 2019 turned out to be profitable as bulge balance sheets lenders bolstered earnings performance with combine profit before tax settling at ₦775.28 billion.
At an average growth rate of 7%, lenders bolstered the bloc’s profitability on the bank of increased credit creation in the real sector.
It would be recalled that the Central Bank of Nigeria (CBN) clamped down on lenders with earnings dilutive regulations but analysts have stated the impacts of those regulations would come in 2020 results.
For the period, Zenith, ACCESS, Guaranty Trust Bank, FBNH and United Bank for Africa combined weight influenced the banking sector profit sharing formula.
Meanwhile, analysis of the financial statement revealed that the Tier-1 banks raised total assets to ₦29.5 trillion as ACCESS Bank consummate its merger deal with Diamond Bank into the bloc.
However, the review shows that the uptick reported in combined total assets carrying value was supported by surge in loans and advances to customers of the banks.
This was in addition to massive increase in non-interest income sources and moderate impairment charges across the industry.
Read Also: United Bank for Africa posts N89.1 billion profit in 2019
Though, operating expenses expanded but not as massive following average increase in general prices which settled at 11.4% in 2019.
In 2019, CBN had reviewed loans to deposit ratio twice. First 60% was set for September, 2019 and later updated to 65% for the year end.
Tier-1 Banks struggled to raise loans book with a number of them focusing in the retail loans to ensure they escaped increased CRR.
The apex bank had sterilised about ₦500 billion of the banks that failed to meet 60% LDR target September, 2019.
On their fiscal responsibilities, the big five banks have set aside ₦121 billion as tax expenses on their operating activities to the government.
As a result, the leading banks by assets and earning combined profit after tax for the financial year 2019 settled at ₦655 billion.
Analysis of the banks performance shows that Zenith lead the pack with profit before tax valued at ₦243.294 billion.
However, from this, the leading financial boutique is expected to settle its tax liabilities ₦34.451 billion.
Its total assets for the financial year 2019 was ₦6.346 billion as lender guided to grow loan book by 2% in 2020.
The lender was followed by GTBank that made ₦231.707 billion in 2019 as pre-tax profit. However, tax claim on the book for the industry cost leader was calculated at ₦34.842 billion.
The carrying value of the bank closed the period at ₦3.758 trillion as management stated intention to adopt holding structure for diversification of interests.
Access Bank Plc ranked after GTBank for profit scorecard with pre-tax level that settled at ₦115.379 billion. Compare to corresponding year in 2018, the bank profit expanded by 11.814%.
The largest bank by total assets tax liabilities for the period was ₦17.9 billion. Thus pushed down profit for the year to ₦94.981 billion.
ACCESS Bank total assets had a carrying value of ₦7.146 trillion at the end of the financial year 2019. The management has however stated intention to increase footprint across Africa in 2020.
United Bank for Africa’s pre-tax profit for the financial year 2019 settled at ₦111.287 billion. This translates to 4.234% growth year on year. In 2018, the bank pre-tax profit was ₦106.766 billion.
Meanwhile, lender’s tax liabilities for 2019 was valued at ₦22.198 billion. Its total assets pitched at ₦5.604 trillion.
The Pan-African financial service profit for the year rested at ₦89.089 billion compare to ₦78.607 billion in the comparable year in 2018.
In its unaudited financial statement, First Bank of Nigeria Holdings did ₦73.613 billion pre-tax profit in 2019.
This is considered as great leap for the oldest financial mall in Nigeria given the recent balance sheet repairs and restructuring exercise.
Analysts said that FBNH has improved greatly, as its profit spike by about 13% year on year when compare with ₦65.265 billion reported in 2018.
FBNH tax exposure for financial year 2019 was ₦11.52 billion as its profit for the year closed the period at ₦62.09 billion.
The holding financial service company total assets carrying value settled at ₦6.181 trillion in 2019.
Buckled with strong capital adequacy level compare with small size, analysts said this performance is largely on the financial strengths of the big banks with windows to deep pockets financing sources.
Leveraging on their strengths, strong capital and liquidity, Tier 1 capital bank have remained a go to partner for highly capital intensive projects in the economy.
Stock market performance
Despite the impressive performance, the Nigerian stock exchange remains unrewarding for the leading banks.
COVID-19 and other developments in the macroeconomic space have knocked off significant value from these five stocks compare to the bullish rush early in the year.
Year to date performance charts show that Zenith bank share price has been knocked down by 41.98% having peaked at ₦22.75.
On Thursday, Zenith closed the trading session at ₦10.80.
The bearish run supported by sell-offs has also knocked off 38.46% from FBNH stocks year to date. The stock had peaked at ₦7.65 but traded on the bourse at ₦4 to a share.
The same has also happened to GTBank stock which lost 38.01% year to date. The market price of the lender’s stock had peaked at ₦34 but traded now at ₦18.10.
UBA share price has also plunged 22.22% year to date from highest point in the year when it traded at ₦8.90. Now, the stock traded on the bourse at ₦5.60 on Thursday.
Access Bank has lost 42.08% of its stock value year to date. The share price was ₦11.20 at the peak period but dropped off to ₦5.85.
Tier-1 Banks Pull ₦775 Billion Profits as Total Assets Hit ₦30 Trillion
