The banking sector in Nigeria continues to thrive, as Nigerian banks with international banking licenses keep spreading their presence across borders. Just like we have foreign-owned banks which ply in the Nigerian market, four tier-one banks in Nigeria, Access Bank, Guaranty Trust Bank (GTB), United Bank for Africa (UBA) and Zenith Bank Plc also have their banks operational in other African countries and in Europe, showcasing that good and globally acceptable brands could be nurtured from Africa’s biggest economy-Nigeria.
BusinessDay Research and Intelligence Unit (BRIU) presents some highlights from tier-one banks’ financials in respect of their foreign operations. These are parts of the on-going analysis of banks for the forthcoming annual Banking and Financial Institutions Awards (BAFI) 2020. After all the necessary deductions were made, the total profit after tax (PAT) of all the foreign subsidiaries of the four Nigerian tier-one banks combined increased by 22.07 per cent from N103.40 billion in 2018 to N126.2 billion in 2019. Interestingly, none of the 4 banks recorded a loss, despite the economic conditions in some of the countries they operate in.
These banks have a total of 38 branches spread across 22 countries outside Nigeria and in the UK. Together, the tier-one banks generated a total operating income of N410.19 billion in 2019, which represents a 6.15 per cent increase over the N386.42 billion made in 2018.
Throughout the analysis, First Bank was excluded from the rest of the tier-one banks because the group only listed its holdings company on the Nigerian Stock Exchange (NSE) which makes certain data publicly inaccessible.
In 2019, Access Bank had a total of seven branches outside Nigeria- DR Congo, Gambia, Ghana, Rwanda, Sierra Leone, Zambia and UK; GTB had a total of 8 branches outside Nigeria- Cote I D’voire, Gambia, Ghana, Kenya, Liberia, Sierra Leone, Tanzania and UK; and UBA had a total of 19 branches outside Nigeria- Benin, Congo Brazza ville, Burkina Faso, Cameroun, Chad, Congo DRC, Cote D’ Ivoire, Gabon, Ghana, Guinea, Kenya, Liberia, Mali, Mozambique, Senegal, Sierra Leone, Tanzania, Uganda and UK. Also, Zenith had a total of 4 branches outside Nigeria- Gambia, Ghana, Sierra Leone and UK.
The analysis of the PAT separately for each bank showed that Access Bank generated N28.79 billion while GTB made N24.67 billion and that was an increase of 34.61 per cent and 33.41 per cent respectively in 2019 compared with 2018. Zenith Bank with N29.15 billion trailed with 21.5 per cent growth in PAT, while UBA made N43.6 billion to record a PAT growth of 12.1 per cent in 2019 compared with N38.8bn in 2018.
Although Access Bank recorded the least revenue between the period of 2018 and 2019, it became the most profitable tier-one bank as it recorded 34.61 per cent increase in PAT from N21.38 billion in 2018 to N28.79 in 2019. This represents a contribution of 22.81 per cent of the total N126.2 billion that the tier-one banks recorded as combined PAT from overseas.
Among the countries where Access Bank operates, Sierra Leone outperformed the remaining 6 countries as the PAT grew by 394.91 per cent between 2018 and 2019. On the contrary, Access Bank in Democratic Republic of the Congo (DR Congo) recorded a decrease of 88.69 per cent within the same period.
The shared contribution of Access Bank in the United Kingdom (UK) and in Ghana represents 55.37 per cent and 40.50 per cent of the total PAT that Access Bank recorded overseas in 2019. While Access Bank Zambia contributed 1.77 per cent, the remaining countries had a shared contribution that is less than 1 per cent. This means that the bulk of Access Bank’s international profit (95.87 per cent) for the year 2019 was from the branches in Ghana and UK while the remaining 4.13 per cent was from the other five foreign branches.
Similarly, GTB recorded an increase of 33.41 per cent from N18.49 billion in 2018 to N24.67 billion in 2019; with a shared contribution of 19.54 per cent of the total 2019 PAT by the four banks. GTB in Cote d’ Ivoire recorded the highest PAT growth of 171.99 per cent among the countries where GTB operates.
Of all the eight foreign countries where GTB had its branches, the bulk of the total PAT was contributed by Ghana, culminating in 63.43 per cent. On the other hand, GTB Tanzania did not contribute much to the bank’s total PAT in 2019. By implication, Ghana drove the profit that came from the foreign subsidiaries of GTB in 2019.
During the same period, Zenith Bank was able to realise an increase of 17.86 per cent in PAT from N24.74 billion to N29.15 billion. That was responsible for about 23.10 per cent of the total tier-one banks’ profit in 2019.
Although it has operations in only 4 countries, all but Zenith Bank in Sierra Leone recorded positive growth in PAT for the year 2020, especially Zenith Bank in Gambia which recorded the highest PAT growth of 53.69 per cent. While Zenith Bank in Ghana at 56.91 per cent contributed the bulk of the total PAT for Zenith Bank’s foreign subsidiaries, Zenith Bank in Sierra Leone at 1.80 per cent contributed the least.
UBA recorded the highest PAT at N43.61 billion compared to other banks in 2019. This is because of its operations in 19 countries, including the UK. In comparison to the previous year, UBA recorded a PAT growth of 12.43 per cent when compared with N38.79 billion in 2018. The expanded network of UBA also revealed in its shared contribution to the tier-one banks’ combined PAT which represents 34.55 per cent.
Within UBA territory, UBA Kenya had the highest PAT growth of 377.19 per cent. The country that contributed the bulk of the PAT that UBA recorded in 2019 was UBA Ghana at 25.44 per cent; whereas, UBA Congo DRC recorded a negative contribution of 0.38 per cent—affecting the performance of other countries.
