The federal government collects payment for security and other services rendered to businesses in the operating in the country and the financial sector is a regular contributor to its coffers. In 2018 the commercial banks listed on the Lagos bourse paid a total of N161 billion to the Nigerian government.
The Banking industry earned a total of N1.02 trillion for the 2018 full year accounting period before accounting for taxes to be paid to the government. Of this sum earned after operations and payments to creditors, a total of N161.21 billion was paid to the federal government. This figure is N50 billion above the tax expense paid in 2017 from total pretax earnings of N854.24 billion recorded in the previous accounting period.
BusinessDay analysis of the tax expense of lenders listed on the bourse shows a total of N161.21 billion received by the federal government of Nigeria in 2018 from 12 banks. Zenith Bank, Ecobank, GTBank and UBA paid a total sum of N126.93 billion almost 80 percent of total tax expense of the total banking industry. The four companies made 67.35 percent of earnings before tax with a total of N689.57 billion.
Tier 2 lenders contributed a mere 4 percent of total sums paid to the government. FCMB, Fidelity Bank, Wema Bank, Union Bank, Sterling Bank and Unity Bank paid a total of N6.82 billion. With a total PBT of N69.80 billion from the total N1.02 trillion, the smaller banks contribution to the total was negligible as the earnings and tax expense seemed negligible.
First Bank of Nigeria Holdings and Access Bank paid the lease amounts in comparison to their respective sizes. First Bank posted pre tax earnings of N65.29 billion and paid less than 10 percent of that sum as tax expenses. The Nigerian bank with a total asset size in excess of N5.5 trillion accounted for N5.5 billion as taxes in 2018.
Access Bank, who recently concluded the merger with Diamond Bank and released Q1 earnings showing total assets in excess of N6.4 trillion, paid N8.2 billion in taxes from its 2018 pre tax profit of N103.19 billion.
Stanbic IBTC concludes the list of banking industry participants with a total payment to the government in excess of N13.71 billion from pre-tax earnings of N88.15 billion recorded in 2018 full year financial calendar.
The NSE Banking index has shed 13.04 index points since the beginning of the year recording a year to date performance in the red. The index, comprising of 10 of the 12 banks is down 3.27 percent since January.
Ifeanyi John
