• Friday, December 01, 2023
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Banks 2012 profit league table


 As the BusinessDay Research “Banking Outlook” published early in the year showed, 2012 turned out to be a year of great profits for Nigerian banks. Compiled cumulative profit after tax figure is N548 billion for 17 banks that BusinessDay Research has their figures for 2012 full year. No bank among the 17 banks declared a loss, unlike 2011 when many banks were in the red. All the banks, including the AMCON-owned bridge banks that were in the red in 2011, are now back in profit territory.

The big banks, however, continue to make the big profits. Topping the profit after tax league table in 2012 is Zenith Bank plc with a profit after tax of N100.68 billion. The bank also has the third-biggest asset size in the Nigerian banking industry. GTBank was the second most profitable bank in 2012 with a profit after tax of N86.69 billion. The bank also closed 2012 as the fifth-biggest bank by asset size in Nigeria. First Bank had the third-biggest industry profit in 2012 with a profit after tax of N75.67 billion. First Bank, however, remains Nigeria’s biggest bank by assets as at the close of 2012.

Two banks with extensive operations across Africa, UBA plc and Ecobank Transnational (ETI), made the fourth- and fifth-biggest profits, respectively, in the Nigerian banking industry in 2012. UBA declared a profit after tax of N54.77 billion, making it the fourth most profitable bank in Nigeria, while ETI declared a profit after tax of N45.48 billion. Though ETI is Togo-based, it has its major operations in Nigeria through its subsidiary Ecobank Nigeria which last year acquired Oceanic Bank. While UBA is a Nigerian bank, it has extensive operations across Africa with subsidiaries in 18 different African countries.

In terms of asset size, ETI has the second-biggest assets in the country, only slightly less than that of First Bank of Nigeria plc. If ETI and First Bank were to merge their operations, as they once considered, both banks would control about 30 per cent of the Nigerian banking industry assets. As at the close of 2012, UBA had 


the fourth-largest assets in the Nigerian banking industry.

Access Bank is the sixth most profitable bank with a profit after tax of N42.86 billion in 2012.

As noted in the BusinessDay Research “Banking Outlook” published in the early part of the year, the top six banks controlled the largest chunk of industry profits and assets in 2011. This has not changed in 2012. The top six banks made a cumulative profit of N406 billion in 2012, which is 74 per cent of the total profit after tax of the 17 banks that BusinessDay Research compiled data for. This shows a high level of concentration of industry profits among the top six banks in the country.

The high concentration of industry profits has strategy implications for the existing relatively smaller banks in the Nigerian banking system. Since industry costs are almost at par, being less profitable is not a good place to be in the Nigerian banking industry. For example, further analysis in the forthcoming BusinessDay Banking Performance report shows that the bigger banks generally have lower cost to income ratios than the smaller banks, which is why they are more profitable.

The smaller banks will have to decide if they want to continue to exist as niche players within the Nigerian banking industry or they would want to muscle their way into a larger share of industry profits through organic and inorganic growth.

The organic growth route will definitely be more challenging considering that the bigger banks are already dominant in their markets. The inorganic growth route seems more attractive. This will mean that the banks at bottom of the profit ladder may decide to go into voluntary mergers or alternatively give themselves up for acquisition by bigger banks or even banks of similar size. The ready opportunity seems to lie in the current quest by the Asset Management Company of Nigeria (AMCON) to sell off the three bridge banks. Ambitious banks at the lower end of the profit league table may see this as an opportunity to grab a larger chunk of industry assets.

BusinessDay Research Unit’s forthcoming report on banking performance will critically examine the performance of Nigerian banks, looking at the position of individual banks in the banking industry, their cost structure, assets and analysis of assets composition, revenues and analysis of sources of revenues, loans and loan portfolio analysis by industry and quality, director remuneration, among others. The report will also look at banking performance as at half-year 2013 and what this hints about banking performance for the rest of the year. Watch out.


Editor, BusinessDay Research Unit

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