Nigerian banks jointly increased their profit by more than a quarter to N858 billion in 2018, but that came with a price for the country’s biggest banks as they lost some ground to smaller lenders in the sector’s profitability war.
The biggest banks, which are often regarded as tier-one lenders, grew their aggregate profit by 17 percent to N611 billion in the year as against a 61 percent increase in total profit to N246 billion posted by the mid-tier lenders, indicating a faster pace than the tier-one banks.
As a result, the percentage share taken by the country’s five biggest banks to the total profit accrued by all publicly-owned banks in the Nigeria’s banking industry shrank to 71 percent in 2018 from 78 percent.
The major banks comprising First Bank of Nigeria Holdings (FBNH), United Bank for Africa (UBA), Guaranty Trust Bank (GTBank), Access Bank and Zenith Bank collectively increased their net income by N86.6 billion in the year compared with N93.3 billion upsurge achieved by the mid-tier banks, thanks to Ecobank’s N32 billion added profit that made that happen.
Nigerian banks have continued to dominate the list of most profitable firms in the country amid increased competition in the space, prompting individual lender to adopt strategies to shore up profit using customer deposits.
An analysis of the after-tax profit of these major lenders show Access Bank grew the most profit, rising by 58 percent to N94.98 billion in 2018 from N60 billion garnered in the previous year. FBNH trailed with 31.4 percent profit growth to N59.7 billion from N45.5 billion.
Nigeria’s largest banks by total assets, Zenith Bank, and by market capitalisation, GTBank, retained their positions as the most profitable lenders in the country in the year with Ecobank, which gained N102 billion, displacing UBA to occupy the third place.
Zenith Bank’s net income for the year stood at N193.4 billion, the second-biggest profit recorded by any Nigerian listed firm, while GTBank gained N184.6 billion.
That brings the aggregate net profit of the two banks to N378 billion and accounts for more than 44 percent of the entire profit made by all the banks in 2018.
When compared to the previous year, the proportion of profit realised by Zenith Bank and GTBank to the total banks waned marginally from 50 percent.
Meanwhile, as at the close of business on Friday, shares of GTBank appreciated by 2.34 percent to N35.05, Access Bank gained 3.48 to close at N5.95 percent, while UBA rose 0.78 percent to N6.50.
However, FBNH plunged 3.85 percent to settle at N7.50, while Zenith Bank remained unchanged at N20.45.