Ten listed Nigerian banks recorded a 44 percent growth (N7.26 trillion) in the value of their investment securities within three months, data compiled by BusinessDay shows.
The lenders are Access Holdings Plc, Zenith Bank Plc, United Bank of Africa (UBA) Plc, Guaranty Trust Holding Company (GTCO) Plc, FBN Holdings Plc, FCMB Group Plc, Fidelity Bank Plc, Stanbic IBTC Holdings Plc, Wema Bank Plc and Sterlings Financial Holdings Company Plc.
According to their latest financial statements, their investment securities rose to N23.75 trillion as of the first quarter of 2024 from N16.49 trillion as of last year.
Investment securities are a category of tradable financial assets such as equities or fixed-income instruments which are purchased with the intention of holding them for investment. As opposed to investment securities, in general, securities are purchased by a broker-dealer or other intermediary for quick resale.
“Naira devaluation was a driver for the growth through translation of the foreign currency component of their investment securities,” Olumide Sole, research analyst at Vetiva Capital Management Limited, said.
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He stated that however, this was not the only driver as banks have started to allocate a larger portion of their interest-earning assets to investment securities instead of giving them out because the risk of investment securities is lesser compared to loans.
“Investment securities are in foreign currencies such as Eurobonds and the revaluation gain means the earnings of the assets will increase which is positive for the banks,” Tesleemah Lateef, a banking analyst in an investment firm, told BusinessDay.
“Banks investment securities increased as a result of revaluation gain. A bank asset valued in dollars will be revalued upward as a result of naira devaluation,” she said.
The naira on Wednesday returned to a loss after gaining for two trading days at the official foreign exchange market, despite a marginal increase in dollar supply.
Data from FMDQ Securities Exchange Limited, reveals that after trading last Wednesday, the naira depreciated by 11.72 percent as the dollar was quoted at the rate of N1,329.65, weaker than N1,173.88 quoted on Tuesday at the Nigerian Autonomous Foreign Exchange.
Further analysis of the statements revealed that Access Holdings, Zenith Bank, and UBA recorded the highest value of investment securities which stood at N8.52 trillion, N4.78 trillion, and N3.73 trillion respectively in the first quarter.
Analysis of individual firms
Stanbic IBTC Holdings
Stanbic IBTC Holdings’ investment securities were worth N64.1 billion in the first quarter of 2024, a 700 percent growth from N7.65 billion as of December 2023.
The bank’s after-tax profit surged to N45.6 billion in Q1 from N28.9 billion in the same period of 2023. Gross earnings increased to N138.2 billion from N80.9 billion.
Stanbic IBTC Holdings, an integral entity within the financial landscape of Nigeria, operates under a robust structure with a primary function as a financial holding company. Incorporating on March 14, 2012, and listing on The Nigerian Exchange Group on November 23, 2012, it stands as a beacon of financial ingenuity and stability.
GTCO
GTCO’s investment securities were worth N1.99 trillion in the first quarter of 2024, up from N894.06 billion as of December 2023.
The bank’s after-tax profit surged to N457.1 billion in Q1 from N58.17 billion in the same period of 2023.
GTCO is a financial services institution in Nigeria with business operations in Cote D’Ivoire, Gambia, Ghana, Liberia, Kenya, Rwanda, Uganda, Sierra Leone, Tanzania, and the United Kingdom.
The company provides banking products and services for the retail, commercial, and corporate banking sectors.
Access Holdings
The investment securities of Access Holdings rose to N8.52 trillion in the first quarter of 2024 from N5.34 trillion as of December 2023.
The holding company’s after-tax profit surged to N159.3 billion in Q1 from N71.8 billion in the same period of 2023. Gross earnings increased to N974.2 billion from N424.9 billion.
Access Holdings formerly (Access Bank Plc) is a financial institution offering banking products and services for the retail, private, corporate institutional, and non-institutional sectors in Africa and Europe.
The company offers solutions for corporate and investment banking, commercial banking, personal banking, and business banking.
Zenith Bank
The investment securities of Zenith Bank grew to N4.78 trillion in the first quarter of 2024 from N3.29 trillion as of December last year.
The bank’s after-tax profit surged to N258.3 billion in Q1 from N66.01 billion in the same period of 2023 and gross earnings increased to N780.6 billion from N269.9 billion.
Zenith Bank is engaged in the business of commercial banking. The bank is engaged in the provision of banking and other financial services to corporate and individual customers.
Its services include the granting of loans and advances, corporate finance, and money market activities. Its segments include corporate, public, retail banking, pension custodial services Nominee-Nigeria, and outside Nigeria Banking-Africa and Europe.
FBN Holdings
FBN Holdings’ investment securities rose to N3.64 trillion in the first quarter of 2024 from N2.79 trillion as of December 2023.
The holding company’s after-tax profit surged to N208.1 billion in Q1 from N50.1 billion in the same period of 2023.
FBN Holdings is a leading financial services institution in Nigeria offering banking products and services for the commercial, corporate, investment, and merchant banking sectors.
The company also offers insurance products for individual and corporate clients and other financial services for merchant banking, asset management, investment and general trading, private equity, financial intermediation services, trusteeship, portfolio management, and discount house services for individual and corporate clients.
UBA
UBA’s investment securities increased to N3.73 trillion in the first quarter of 2024 from N3.09 trillion as of December 2023.
The bank’s after-tax profit surged to N258.3 billion in Q1 from N66.01 billion in the same period of 2023. Gross earnings increased to N780.6 billion from N269.9 billion.
UBA is a financial services institution in Nigeria offering banking products and services to the personal, commercial, and corporate sectors.
The company provides a full-service product offering ranging from transactional accounts, overdrafts, and mortgage finance to domiciliary deposits, treasury services, asset management services, bonds, money market deposits, and risk management solutions.
Sterling Financial Holdings Company
The investment securities of Sterling Financial Holding Company rose to N41.4 billion in the first quarter of 2024 from N36.9 billion as of December 2023.
The bank’s after-tax profit surged to N7.5 billion in Q1 from N4.05 billion in the same period of 2023. Gross earnings increased to N71.02 billion from N46.26 billion.
Sterling Financial Holdings Company is a Nigerian financial holding company with two primary subsidiaries: Sterling Bank Plc, which offers commercial banking services, and Alternative Bank Limited, which operates as a Non-Interest Banking business.
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FCMB Group
FCMB Group’s investment securities grew to N874.3 billion in the first quarter of 2024 from N794.7 billion as of December.
The bank’s after-tax profit surged to N28.77 billion in Q1 from N9.29 billion in the same period of 2023. Gross earnings increased to N179.1 billion from N87.43 billion.
The group is a financial services institution offering products and services for the commercial, corporate, and institutional sectors in Nigeria and Europe.
The company’s core portfolio is focused on investment banking, asset management, commercial banking, corporate banking, personal banking, institutional banking, and treasury and financial markets.
Wema Bank
Wema Bank’s investment securities was N13.3 billion in the first quarter of 2024, up from N13.4 billion as of December 2023.
The bank’s after-tax profit surged to N9.67 billion in Q1 from N5.38 billion in the same period of 2023.
The bank is a Nigeria-based bank that offers retail banking, small and medium-sized enterprise (SME) banking, corporate banking, treasury, trade and financial advisory services. Its segments include South-West, South-South, Abuja, and Lagos zones. Its business solutions include corporate banking, trade services, and e-banking. Its investments and loans include overdrafts, term loans, import finance facilities, finance lease facilities, and agricultural finance.
Fidelity Bank
The investment securities of Fidelity Bank dropped to N99.04 billion in the first quarter of 2024 from N227.8 billion as of December 2023.
The bank’s after-tax profit surged to N31.44 billion in Q1 from N15.61 billion in the same period of 2023. Gross earnings increased to N192.1 billion from N101.1 billion.
The bank is a commercial bank in Nigeria headquartered in Victoria Island, Lagos. It is licensed as a commercial bank with international authorization, by the Central Bank of Nigeria, the central bank and national banking regulator.
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