• Friday, June 14, 2024
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Banks dominate Nigeria’s branding landscape amid economic headwinds

AG Mortgage Bank grows full year 2023 profit by 92%

Banking brands dominated Nigeria’s brand landscape despite currency devaluation and rising inflation, a new report by Brand Finance — a London-based brand valuation consultancy has revealed.

The report, which analysed data from March 2023 to March this year, said banking brands made up half the total brand value of the nation’s top 25 brands, with five banks ranking among the top seven.

“Within the ranking, the most valuable, strongest, and fastest-growing brands belong to the banking sector. Despite the declining value of the naira, Nigeria’s top banking brands have successfully raised prices without harming their brand strength, as shown by improved Brand Strength Index scores for all brands across the ranking,” the report said.

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Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.

Brand Finance analysed banking brands’ internationality to better understand their positioning and performance in an increasingly globalised market. It adopted the royalty relief approach in measuring organisation brand value. The method involves a combination of the market and income valuation approaches.

The brand report also revealed that Access Bank maintains its dominance as the country’s most valuable brand, with a 73 percent increase in brand value to reach N355.3 billion.

“This makes it the 31st most valuable brand across Africa in the Brand Finance Africa 200 2024. The brand value increase stems from improved revenues, primarily driven by significant growth in its interest-based income,” it said.

It noted that Stanbic IBTC’s spiked interest income and improved profits also contributed to a brand value increase of 184 percent to N75 billion, making it the fastest-growing brand in the ranking.

“GTCO (brand value up 31 percent to N186.8 billion), Nigeria’s strongest brand, noted impressive scores across consideration, reputation, and price premium. Perceptions of its price premium further highlight the strong position of banking brands in Nigeria, and their ability to command higher prices in response to inflationary pressures.”

Beer brand Star (brand value up 62 percent to N55.8 billion) scored particularly highly in familiarity and consideration and is Nigeria’s second strongest brand with a AAA- rating. Orijin’s brand value which more than doubled to N104.4 billion earned a AAA- BSI rating, making it the country’s third strongest brand.

“Despite a tumultuous financial year marked by the naira plummeting over 30 percent against the US dollar and soaring inflation, the country’s leading brands have displayed remarkable resilience,” Babatunde Odumeru, managing director at Brand Finance Nigeria said.

Read also: Nigerian banking: Mixed views on bank recapitalisation policy

He said these top-tier brands have not only withstood economic pressures, but many have continued to flourish, with 23 of Nigeria’s top 25 most valuable brands achieving brand value growth.

“We are also increasingly seeing top brands continuing to expand beyond their domestic borders and grow their influence across the continent.”

Last May, President Bola Tinubu scrapped a costly but popular petrol subsidy and lifted currency controls in June, which he said was to save the country from going under.

But his actions have worsened inflation currently in double-digits and at the highest level on record. The rising inflationary pressures have weakened the purchasing power of consumers, even as businesses grapple with higher operating costs.

The removal of the petrol subsidy tripled the petrol price to above N600, causing public transportation providers such as buses, tricycles, and motorcycles to raise transportation fares.

The naira suffered a near 30 percent devaluation this year following a 40 percent devaluation last June.

According to the National Bureau of Statistics, the headline inflation quickened for the 16th straight time to 33.69 percent in April, up from 33.20 percent in March.

Food inflation, which constitutes more than 50 percent of headline inflation also increased to 40.53 percent from 40.53 percent.