- In the first half of 2023, Nigerian companies collectively reported strong financial performance despite facing economic challenges and policy shifts.
- Top companies, including banks, telcos, consumer goods, and cement producers, increased their profits.
- Nigerian banks, benefiting from foreign exchange revaluation gains following the Naira’s devaluation, stood out as top performers. Among them, UBA emerged as the most profitable company, with significant profit growth.
Following the announcement of the removal of subsidies and the unification of the exchange rate, businesses, sectors, industries, and the Nigerian populace have been actively grappling with the consequences and challenges that have emerged.
The country’s headline inflation rose to 22.79% in June 2023, 4.19% Year-on-year points higher compared to the rate recorded in June 2022, which was 18.60%.
Concurrently, interest rates experienced a substantial uptick, reaching a 15-year high of 18.75% in July, a significant increase from the 11.5% rate observed in December 2021.
This adjustment was made to combat the surging inflation.
Furthermore, the growth rate of the Gross Domestic Product (GDP) slowed down to 2.51% year-on-year in real terms during the second quarter of 2023.
This rate is lower than the 3.54% recorded in the second quarter of 2022, highlighting a deceleration in economic growth.
In the case of the listed companies, their performance was indeed mixed. The banking sector companies enjoyed a windfall, experiencing significant profit increases.
However, the consumer goods sector, particularly companies within the brewery sub-sector, faced substantial declines in profits, primarily due to the impact of policy shifts.
Nevertheless, it is noteworthy that collectively, 50 of the listed companies on the Nigerian Exchange (NGX) reported a profit before tax of N2.767 trillion, surpassing the figures for H1 2022 by a substantial 68.75% (N1.64 trillion).
Additionally, post-tax profit saw a notable increase of 27.84% to reach N2.269 trillion.
From among these companies, we have compiled a ranking of the 10 most profitable companies in Nigeria for H1 2023, with the ranking based on their profit before tax (PBT).
PBT is a critical metric for assessing a company’s performance, particularly when viewed from a shareholder’s standpoint, as dividend payments are typically derived from the net income, which remains after taxes are subtracted from the PBT.
A cursory review of the ranking reveals that among the top 10 most profitable companies in Nigeria for H1 2023, 7 of them belong to the banking sector, 1 represents the telecommunications industry, 1 is from the cement-producing firms, and 1 is from the consumer goods sector.
The banks collectively reported a profit before tax (PBT) of N1.69 trillion, while the telecommunications companies (telcos) recorded N200.291 billion as PBT.
Additionally, the consumer goods company reported N109.381 billion in PBT, and the cement company recorded N239.864 billion in PBT.
Below is the list of the 10 most profitable companies in Nigeria in H1 2023.
#6 MTNN – N200.391 billion (-25.40%)
MTN Nigeria ranked sixth on the list of most profitable companies in the country with a PBT of N200.391 billion, which is lower than the N268.635 billion recorded in the previous year.
MTN suffered a foreign exchange loss of N131.4 billion which dragged profits down.
However, despite this challenge, MTN’s report highlighted robust operating profit margins, indicating the strength of its business model.
#5 FBNH – N206.261 billion (+213.83%)
FBNH has secured the 5th position on the list with an impressive profit before tax (PBT) of N206.261 billion.
The bank attributes this achievement to its reinforced foundations, deep market understanding, strong risk management practices, and execution capabilities.
The financial performance in the first half of 2023 represents the Group’s strongest performance in its nearly 130-year history.
#4 Dangote Cement – N239.863 (-9.45%)
Dangote Cement, the largest cement producer in Africa posted a PBT of N239.863 billion in H1 2023, down by 9.45% from N264.890 billion in H1 2022.
The firm, which made most of its revenue from the sales of cement and clinker saw its revenue increase by 17.67% to N950.832 billion from N808.037 billion a year ago, despite a 4.27% decline in sales volume.
Operating profit improved by 19.46% to N380.036 billion as net income increased by 3.78% to N178.603 billion, due to a decline in income tax expenses, which fell by 33.98% to N61.260 billion.
#3 GTCO – N327.398 billion (+217.09%)
Guaranty Trust Holding Company saw its PBT rise by 217.09% to N327.398 billion.
According to the holding company, the PBT growth is on the back of the leveraged synergies created through the Holding Company structure, robust FX liquidity, and structure of its balance sheet which produced huge gains from the devaluation of the Naira, efficient capital planning, and a well-crafted and executed retail strategy.
The group expects in the 2nd half revenue streams from all its business verticals to continue to grow and further gains in earnings diversification as the Financial Holding Structure continues to gain traction; specifically, it expects earnings from the non-banking Subsidiaries (i.e., Payments, PFA, and Asset Management) to strengthen and contribute 3% of the Group’s performance by FY-2024.
#2 Zenith Bank Plc – N350.360 billion (+169.50%)
Zenith Bank recorded a pretax profit of N350.360 billion in H1 2023, surpassing its 2022 FY PBT of N284.7 billion 2022, and 169.50% higher than the N130.005 billion recorded in H1 2022, placing the bank second.
Zenith is losing this position to another bank that is not GTB. Zenith’s ceding of second position could also be due to the huge loan impairment charge it incurred during the period that even led to the decline in net interest income after impairment charges.
The multiple award-winning banks in 2022 declared an interim dividend payment of N15.698 billion. The bank also incurred N58.529 billion as income tax expense.
#1 UBA (United Bank for Africa) – N403.647 billion (+370.73%)
Topping the chart for the first time is UBA, achieving an extraordinary 370.73% growth in profit before tax (PBT), which positions it as the most profitable bank in Nigeria for the first half of 2023. UBA has led not just in absolute profits but also in profitability growth.
UBA also appears to be the bank that made the most money (in terms of growth) when it came to its net trading income (excluding interest and commissions). It raked in over N427 billion in the second half of the year. No bank came close by our records.
Bubbling under
- Access Holdings– N167.601 billion
- ETI – N150.315 billion
- FBN Holdings Plc – N157.9 billion
- BUA Foods – N109.381 billion
- Stanbic IBTC – N82.985 billion