Making the most profits doesn’t necessarily equate to being the most profitable because profitability is beyond how much financial gains a company records, it is essentially a measure of how efficiently a company is run.
There are different metrics for measuring profitability including Return on Assets (RoA), Return on Equity (RoE), Net Income, and Profit Margin, among others.
Nairametrics will be analysing the most profitable companies in Nigeria so far, using their return on equity as the measuring indicator. The return on equity will be tracked based on their financial performances within the nine months ending September 2023.
While banks have made the most profits in Nigeria so far, the companies that have displayed the most efficiency in generating income from shareholders’ equity are in the agricultural sphere.
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AXA Mansard Insurance – 33.19%
With a net income of N12.56 billion within the nine months ending September 2023, the insurance group recorded a return on equity of 33.19%.
While the group’s net assets within the nine months ending September 2023 grew by 23.8% year-to-date, the group’s net income within the nine months ending September 2023 grew by 738% year-on-year from the corresponding period in 2022.
Although dividend details for the current period haven’t been disclosed, the group’s earnings per share also surged by 700% year-on-year, reaching N1.36 compared to N0.17 in the same period last year.
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United Bank for Africa – 33.28%
With a pre-tax profit of N502.1 billion in 9M 2023, UBA has ranked only behind Zenith Bank in terms of profit generation in Nigeria. However, concerning return on equity, UBA ranks ninth with a RoE of 33.28%.
The group’s net assets year-to-date (9M 2023) have grown by 92.8%, however, its net income within the same period grew by 287.2%. Its earnings per share also grew by 295.4% year-on-year to N12.93, implying impressive returns for shareholders’ equity.
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GTCO – 33.34%
GT Holdings Company, even with a lower net income in the nine months ending September 2023, outpaces UBA in terms of Return on Equity. Within the nine months ending September 30, 2023, GTCO posted a return on equity of 33.34%.
While the group’s net income grew by 181.9% year-on-year to N367.4 billion, its net assets grew by 36.7% within the same period.
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Zenith Bank – 39.27%
Apart from generating the most profits in Nigeria so far, Zenith Bank also ranks as the most profitable bank in the country based on return on equity.
With a nine-month net income of N647.7 billion, representing a 412.6% year-on-year growth. And a year-to-date net assets growth of 39.2%, the group has recorded a return on equity of 39.3%. The group’s earnings per share have grown year-on-year by 149% to N13.82.
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Cornerstone Insurance – 41.72%
Cornerstone Insurance Plc has delivered an impressive performance, emerging as Nigeria’s most profitable financial institution in 2023 with a remarkable return on equity of 41.7%.
Despite recording a net income loss of N388 million in Q3 2023, the insurance coy recorded a net income of N11.4 billion throughout the nine months, marking a 2667.7% year-on-year growth from the same period in 2022.
The company’s impressive performance is linked to the net foreign exchange gain of N11.9 billion within the period under review.
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BUA Foods – 43.42%
One of Nigeria’s largest firms and the tenth highest profit maker in 2023, BUA Foods ranks as the fifth most profitable company in the country based on return on equity.
The group recorded a net income of N105.6 billion during the nine months of 2023, however, marking a 53.6% year-on-year growth from the corresponding period in 2022. The group also recorded a year-to-date net assets growth of 10.7%.
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MTN Nigeria – 45.64%
Nigeria’s highest profit generator in 2022, MTN Nigeria has suffered significant losses due to foreign exchange exposures in 2023. This has caused the group’s nine-month net income to decline to N147.4 billion, representing a 45.2% year-on-year decline from the corresponding period in 2022.
The group delivered an impressive return on equity of 45.64% in nine months of 2023 because as net income declined year-on-year, the group’s shareholders’ equity also declined by 7.6% year-to-date.
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National Salt Company of Nigeria (NASCON) – 47.40%
One of Dangote Group’s subsidiaries, National Salt of Company ranks as the third most profitable company in the country, with a return on equity of 47.40%.
Despite recording a low nine-month net income of N11 billion in 9M 2023, the company recorded a year-on-year growth of 282% from the corresponding period in 2022. The company also recorded a net assets year-to-date growth of 43.9%.
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Presco – 50.24%
Presco Plc, Nigeria’s largest oil palm producer, ranks as the second most profitable company in the country, with a return on equity of 50.24%.
The group recorded a net income of N23.48 billion during the nine months ending September 2023, representing a year-on-year increase of 47.8% from the corresponding period in 2022. The group also recorded a year-to-date net assets growth of 19.2%.
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Okomu Oil – 53.96%
Okomu Oil Palm Company tops the list as Nigeria’s most profitable company based on return on equity, with a RoE of 53.96%.
The group’s 9M 2023 net income was N20.9 billion, representing a year-on-year growth of 15.9% from the corresponding period in 2022. The group also recorded a year-to-date assets growth of 27.8%.
What you should know
Among the companies on this list, three are banks, two are insurance companies, two are consumer goods companies, two are agriculture companies, and one is a telecommunications company.
The diversity of the list highlights the varied ways in which profitability is achieved in the Nigerian business scene.
Despite variations in net income and equities, RoE is a crucial metric in assessing performance.
Efficiency in utilizing shareholders’ equity is a key factor in determining the profitability of a company.