Big Wins: How Nigerian Banks Netted N4.2tn Despite Tough Times

Amid economic struggles, seven leading Nigerian banks collectively posted a profit of N4.2 trillion for the 2024 financial year.

These banks—Zenith Bank, United Bank for Africa (UBA), Guaranty Trust Holding Company (GTCO), First Bank, Fidelity Bank, Stanbic IBTC, and Wema Bank—achieved significant financial growth despite inflation, currency devaluation, and reduced consumer spending power.

Strong Financial Performance Amid Market Pressures

The banking industry faced regulatory adjustments, mergers, and bank failures, yet these top-tier institutions reported strong earnings and increased profit margins.

Zenith Bank reported a profit after tax of N1.03 trillion, a 52.5% increase from the previous year, with total gross earnings of N3.9 trillion. Pre-tax profit stood at N1.32 trillion, marking a 66.6% year-on-year increase.

UBA recorded a 26.14% rise in profit after tax, reaching N766.6 billion compared to N607.7 billion in 2023. The bank’s gross earnings surged by 53.6% to N3.19 trillion, while total assets grew to N30.4 trillion.

GTCO saw a profit after tax of N1.01 trillion, an 89.4% year-on-year increase, with gross earnings climbing 81.3% to N2.14 trillion. The bank’s interest income grew to N1.32 trillion from N436 billion the previous year.

Fidelity Bank achieved a 210.01% increase in pre-tax profit, reaching N385.2 billion. Post-tax profit rose by 179.63% to N278.1 billion, with total gross earnings growing 87.72% to N1.043 trillion.

Stanbic IBTC posted a pre-tax profit of N303.8 billion, a 60.23% increase, with post-tax profit also up by the same percentage to N225.3 billion. Gross earnings expanded by 78.26% to N823.3 billion.

FBN Holdings reported a 113% rise in gross earnings to N3.33 trillion. Pre-tax profit jumped 142% to N862.38 billion, while net interest income grew by 155% to N1.39 trillion.

Wema Bank recorded a 135% increase in pre-tax profit, totaling N102.5 billion. The bank’s total assets expanded by 60% to N3.58 trillion, while customer deposits grew by 36% to N2.52 trillion.

Experts Discuss Banking Sector’s Profitability

Financial analysts link the record-breaking profits to factors such as foreign exchange inflows and high-interest rates on treasury bills set by the Central Bank of Nigeria (CBN).

Adeleke Adebayo from the Independent Shareholders Association explained that banks leveraged foreign exchange transactions and high-yield treasury bills to drive revenue. “Banks benefited immensely from forex transactions and treasury bills due to the elevated interest rates set by the CBN,” he noted.

Similarly, shareholder Okezie Boniface praised the resilience of banks, pointing out that while many industries struggled, the banking sector flourished.

Economist Dr. Muda Yusuf observed that while some sectors of the economy faced hardship, financial institutions gained from increased government revenue and transaction volumes. He also warned against misinterpreting the trillion-naira profits, emphasizing that currency depreciation inflated these figures.

Debate Over Economic Disparities

Despite the impressive profits reported by banks, some experts question the disparity between banking success and the broader economic struggles.

Economic analyst Professor Adebayo Adams expressed skepticism, urging the CBN and the Chartered Institute of Bankers of Nigeria (CIBN) to provide clarity on the situation. “With businesses struggling, inflation rising, and hardship increasing, it’s perplexing how banks are making record-breaking profits. Transparency is needed,” he asserted.

He also criticized excessive banking fees, arguing that high charges on account maintenance and loan interest rates hinder small business survival.

While the banking sector’s profitability highlights its resilience, concerns persist over economic inequalities and financial accessibility. The debate continues on how the financial sector can contribute more effectively to overall economic growth and stability.