The results for the top five commercial banks in Nigeria has now been made known. Whilst UBA, First Bank, and Zenith had published theirs months before, Access Bank and GT Bank only published theirs a few weeks ago as their accounts are audited twice yearly. So how did they measure up?
Revenue
The top 5 banks made a total revenue of N659.2b for the first half of this financial year. First Bank had the largest share with about 28% with Zenith coming second at 23%. UBA and Access Bank came third and fourth respectively at 16.8% and 16.4% respectively and GTB coming last at 16.08%. All banks saw varying rise in turnover when compared to the same period last year, a result mostly attributed to increased revenue from investment securities and marginal rise in lending activities.
Operating Profit
The banks made a total operating profit of N218b for the first 6 months of this year. This put their combined operational profit margin at 33.8% of Gross Earnings and a 104.6% increase when compared to the same period last year. Expectedly, GTB did very well here by coming a close second to First Bank. The bank continues to demonstrate an uncanny ability to be cost efficient with operating profit as a percentage of operating income coming at 58.6%, by far the highest of the lot. First Bank despite its large share of revenue ccould only deliver 38%.
Pre-Tax Profits
GTB also posted an exceptional profit margin of 42% as the bank make N42 for every N100 of revenue it made. This was much higher than the industry average of 27%. It is important to note that UBA more than doubled its profit margin from 11% to 24% during the first half of this year. This was the highest increase of the lot showing a marked return into positive territory for the bank. Access Bank also grew profit margin by over 60% to 24.4% during the period.
In general, First Bank came out tops marginally in pre-tax profit posting N54b for the period. GTB came a lose second with N53b. The banks combined made a pre-tax profit of N218b. Total profit after tax for all 5 banks was N185b, making up 76% of total profits made by Nigerian Banks quoted on the NSE for the first half of this year.
Investment Ratios
Shareholders of Zenith Bank must be worried with the negative real (after inflation) returns on equity the banks posted. At just 10% ROE was well under inflation rate and lower than average bond rates paid by the FGN. GTB excelled with 18.5% whilst GTB came second with 14% on ROE.
Balance Sheet Strength
First Bank by far dominated total assets with over three trillion naira in assets, a figure that is almost 30% of the N10.2tr in combined total assets managed by the 5 banks. Zenith came second with N2.4tr and UBA last with N1.3tr. However, First Bank’s dominance on assets did not reflect efficiently as the bank could only muster 1.8% on ROA. A result that means the bank only generates N1.8 for every N100 of Assets it owns. It was also below the industry average of 2.2% and almost half of the 3.3% posted by GTB (the best of the quintet).
On total deposits, the banks generated a combined N7.5tr, a 5.1% of increase from the prior period last year. First Bank remarkably increased total deposits by 14.9% 5 times the closest which was GT Bank.
Conclusion
So overall you’d have to say GT Bank performed best in terms of shareholder returns. Despite coming second on profits and a last in revenue their shareholders should be smiling better as the bank earned N18 for every N100 of revenue beating the remaining four. The bank has shown a remarkable ability to be cost efficient, a model that has ensured they rise above the rest despite their less than impressive revenue growth ( a major potential worry for me). For First Bank, their dominance in terms of market share will continue as it leverages on its economies of scale to expand. Soon, this may transcend increased profits in the years to come. UBA and Access Bank are banks undergoing various forms of restructuring. Access just acquired Inter Continental Bank and UBA is clawing back from losses on bad loans from the prior year. They both may be formidable in the years to come. Zenith Banks continues to dominate in shareholders fund continuing with steady rise in profits. Zenith, like First Bank can surely do better, only if they cut down on huge not-interest bearing cost.
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Very good analysis, well done. Probably do same for Companies that are funded by these banks, especially the Manufacturing quoted ones and lets see the disparity.
My worry is that the Banks grow, but their customers decrease, so over time, the Banks will have less customers to fund and that will affect their returns.
This is a good development,every bank should audit their account on yearly basis and get it published for the public and customer review and the same thing should be introduce to other governent organisation