Five banks, a cement maker and a telecommunication company were among Nigeria’s seven most profitable publicly-listed companies in the first half of 2023.
The seven companies, which include UBA Plc, Zenith, GTCO, Dangote Cement, FBN Holdings Plc, MTN Nigeria and Access Bank, were able to weather the storm of an acute cash crunch, accelerating inflation, naira depreciation, and hike in fuel and diesel prices.
The companies posted a combined profit before tax of N1.89 trillion in the six-months to June 2023.
Banks dominating the list of most profitable companies is very unlike the global trend where technology and oil companies lead the pack of profitable companies.
Analysts have attributed the increased profitability of Nigerian banks to revaluation gains on their net long US dollar income positions.
On June 14, 2023, the Central Bank of Nigeria merged all foreign exchange markets into the Investors and Exporters (I&E) window and reintroduced the willing buyer, willing seller model.
As a result, the official exchange rate increased from N463.38/$ to N747.8/$ today.
However, the reform has only widened the spread between the official and parallel market rates, as the naira has depreciated by 61.4 percent against the dollar since the float.
Tochukwu Okafor, a senior lecturer at Baze University, attributed the banks’ financial performance to the devaluation of the naira. He highlighted that most tier-one banks have international affiliations, with a significant portion of their assets denominated in dollars. As a result, the devaluation has led to a substantial increase in their profits, he said.
“In the history of banking, hardly any bank has ever declared profits of up to N400 billion annually, not even in a half-year period. However, due to the devaluation and the transition from a pegged exchange rate to a freely floating one, banks have experienced a significant spike in their declared profits in the first half of 2023,” he said.
He said a substantial portion of this increased profitability is attributed to non-interest income. The devaluation has affected fees, commissions, off-balance sheet transactions, and other non-interest income sources, which now contribute significantly to the banks’ higher profits.
“According to their financial statements, a significant portion of their profits is derived from non-interest income, and this portion has grown in recent periods,” Okafor added.
UBA (N404 billion)
UBA posted the biggest profit before tax amounting to N404 billion, an increase of 371 percent compared to the N85.75 billion and profit after-tax profit, accounting for N378.2 billion of the N1.13 trillion.
A leap of 437.8 percent from N70.33 billion. The Group delivered a 164 percent growth in its gross earnings which rose to N981.78 billion as of June 2023, up from N372.36 billion recorded last year in June 2022.
Basic and diluted earnings per share stood at N10.95 per share from N1.98 per share in the comparable periods.
It is a leading pan-African financial institution, offering banking services to over thirty-seven million customers across 1,000 business offices and customer touch points in 20 African countries.
With a presence in New York, London, Paris, and now the UAE, UBA is connecting people and businesses across Africa through retail, commercial, and corporate banking, innovative cross-border payments and remittances, trade finance, and ancillary banking services.
Zenith Bank (N291.7 billion)
Zenith Bank Plc reported N291.7 billion profit before tax, up from N111.4 billion. Its profit before tax grew by 169 percent to N350.4 billion.
The bank recorded a 139 percent growth in gross earnings from N404.8 billion, driven by both interest income and non-interest income. Basic and diluted earnings per share stood at N9.29 per share from N3.55 per share in the comparable periods.
Its cash and cash equivalents amounted to N2.4 trillion, up from N972.9 billion. The is a large financial service provider in Nigeria and Anglophone West Africa, headquartered in Victoria Island, Lagos. It is licensed as a commercial bank by the Central Bank of Nigeria, the national banking regulator.
GTCO (N280.48 billion)
GTCO’s profit after tax jumped to N280.48 billion from N77.56 billion. Its profit before tax amounted to N327.4 billion compared to N103.3 billion in 2022.
The holding company’s gross earnings amounted to N672.6 billion from N239.29 billion. Its basic earnings per share to N9.94 per share from N2.70 per share in the comparable period.
GTCO recorded the highest cash and cash equivalents which stood at N2.5 trillion, from N1 trillion in 2022.
GTCO is a multinational financial services group that offers retail and investment banking, pension management, asset management, and payments services, headquartered in Victoria Island, Lagos, Nigeria. It was created in July 2021 following the corporate reorganization of Guaranty Trust Bank PLC (or GTBank) into a holding company.
Dangote Cement (N239.86 billion)
Dangote Cement’s profit before tax (PBT)stood at N239.86, while profit after tax of N178.6 billion in the first half of 2023 from N172.1 billion in the first half of 2022
Dangote Cement’s revenue grew to N950.83 billion in the first half of 2023 from N808.04 billion in the first half of 2022.
Dangote Cement’s net exchange loss on foreign-denominated transactions stood at N113.63 from N40.66 billion in the comparable periods.
According to the company’s six months of unaudited results, sales volume for pan-African operations was up 11.6 percent to 5.4Mt from 4.9Mt in H1 2022. The total pan-African volume accounts for 40.4 percent of Group volumes in the half year.
The pan-African operations performance is attributable to robust demand, particularly from Ethiopia, Senegal, Zambia, and Congo. Hence pan-African revenues grew by 81.8 percent to N336.4 billion.
Read also: How rate hikes, weaker naira hurt FMCG firms
FBN Holdings (206.3 billion)
FBN Holdings reported a profit before tax rose to N206.3 billion from N65.7 billion. its profit after tax to N187.2 billion from N56.5 billion.
Its gross earnings rose 82.8 percent to N656.6 billion from N359.2 billion. Basic earnings per share stood at 519 kobo from 155 kobo. FBN Holdings’ cash and cash equivalents amounted to N1.52 trillion from N1.45 trillion.
MTN Nigeria’s first-half financial report ending June 2023, delivered a profit before tax (PBT) of N200.39 billion.
The telco giant recorded revenue growth of 21.96 percent to N1.15 trillion from N950 billion in the same period last year.
Access Holdings Plc
Access Holdings Plc delivered a profit before tax (PBT) and profit after tax (PAT) figures of N167.6 billion and N135.4 billion, translating into a 71.4 percent and 52.6 percent year-on-year growth respectively.
Access Holdings also witnessed a 35 percent year-to-date growth in customer deposits, concluding the half-year at N12.5 trillion.
This growth was inclusive of all business segments, firmly solidifying the Group’s stature as the largest financial institution in Nigeria by total assets.
The Group reported robust gross earnings of N940.3 billion, reflecting a year-on-year (y/y) growth of 58.9 percent. This substantial surge in gross earnings was driven by a combination of a 63 percent growth in interest income and a 51.9 percent increase in non-interest income.