Third quarter results from the banks who just last year were struggling to remain solvent indicate that the “good” times are indeed here again. How else do you explain 3rd quarter pretax results with an increase of over 500% from last year?For example, FBN made 32b in pretax profit for the 3rd quarter compared to 7.9b loss last year. Their closest rivals Zenith Bank went from 13.22b last year to 39.16b in pretax profits for the 3rd quarter this year. UBA who I also consider amongst the top three went from 13.5b loss 3rd quarter last year to 39.16b profit this year.
Ordinarily this is worth celebrating as our banks have turned the ink in their bottom line to black from the doomed red. But then the question is at to who’s cost? Judging from their post results analysis they mostly attributed this to cost cutting and and increase in asset creation. Whilst sounding plausible on the face of it, obscured from this is the number of people who have lost their job which by estimates is over 20,000. So whilst they still maintain their high level salaries and perks at the upper 10% of their industry the remaining 80% have to either loose their jobs or take a huge salary cut. No wonder they’re making astronomical profits.
What beats me also is the fact that the hawks didn’t even have to wait too long to pounce. The same recycled pattern, for well, as long as I’ve known banking. The banks make huge profits to the detriment of small businesses and manufacturers who live with losses and probably never enjoy the fruit of their labour. So when the hawks finish devouring them and have no one to devour, they turn to themselves and hence another banking crash. This is the cycle repeating itself. Don’t get me wrong for I’m not against profit making banks. I just believe if the banks are raking in profits then we should see businesses growing as well. That is not the case and haven’t been so for years. The era of huge banking profits to the detriment of other segments of the economy stop. For now that doesn’t seem so and there is no indication that we will see changes in the near future.
So welcome to another hawkish ride fellas, I hope this time less blood is eaten.