The big money lenders have released financial statements detailing 2018 performance and the asset base of four of five top lenders, who all posted significant growth in profits, have increased by a total of N2.28 trillion.
Access Bank and United Bank for Africa grew total assets by an average of 20.22 percent while Zenith Bank and Stanbic IBTC grew total assets by a combined N637.7 billion leading to a combined asset base of N17.44 trillion for the four banks in 2018 from N15.15 trillion in 2017. Guaranty Trust Bank was the only bank in view that saw its assets shrink by N63.8 billion among its peers but still managed to grow profits by 10 percent.
BusinessDay analysis of top tier bank financials show that the rapid growth in total assets was driven by two of the five top lenders in question. Access Bank and United Bank for Africa grew total assets the fastest, as a combined N1.65 trillion was added to their books during the 2018 financial year. This was buoyed by an average 37.65 percent increase in financial assets and 35.6 percent more cash or its equivalent on their balance sheet.
The two banks also grew their loan book by an average of 3.55 percent, bringing the total loans and advancements of the two banks to N3.86 trillion at the end of the 2018 financial calendar from N3.73 trillion in 2017.
As the race to N6 trillion in assets is up to Zenith Bank for the taking, the victory might be short-lived when the Access-Diamond merger is complete. With Access Bank’s growth trajectory in terms of total assets, the new entity that will be birthed from the merger could easily see a N6 trillion asset base even after all bad loans from Diamond Bank are written off.
Analysts from EUA Intelligence are of the opinion that the total asset base of the combined entity, from the legally complete marriage of Access and Diamond, will be in the tune of N6.3 trillion. This estimate had taken into account the write off of all non-performing loans of Diamond and an additional N180 billion provision in order to be compliant with IFRS 9.
These assets can only show the true financial position of a business when we juxtapose them with returns generated from said assets. Thus, the return on average assets (RoAA), which is a metric that shows how well these companies sweat their assets over a period of time, is required. On this scale, GTBank far outshines its peers as it generates N5.6 of profit on every N100 worth of assets in their balance sheet. The closest to this performance is Stanbic IBTC with 4.9 percent RoAA followed by Zenith Bank (3.33%), Access Bank (2.10%) and UBA ends the list by making N1.7 profit on every N100 worth of asset.
