Nigeria’s five topmost banks recorded a total profit of N416.55billion in the first half of this year.
The largest commercial lenders continued to draw on technologies and improved operating efficiency to mitigate headwinds and improve underlying profitability of their businesses.
Average profitability in the top five banking group improved by a percentage point, which translated into 12.1 per cent increase total pre-tax profits recorded by the top five banks. Average pre-tax profit margin for the top five group inched up from 33.35 per cent in first half of last year to 34.14 per cent in first half of the year, undercut by decline in profitability of the third largest bank.
The top five banks, which traditionally pay cash dividend twice a year, will distribute N44.22 billion as interim cash dividend for the first half of this year, with interim dividend per share ranging from 20 kobo to N1.
The top five banks, by market capitalisation, otherwise known as the first tier banks, included Guaranty Trust Bank (GTBank) Plc, Zenith Bank International Plc, Stanbic IBTC Holdings Plc, Access Bank Plc and United Bank for Africa (UBA) Plc. Banks are required by regulations to maintain the Gregorian calendar year as their financial year, with half year ending June 30 yearly.
A market intelligence report by The Nation at the weekend showed all top-five banks witnessed steady growths across key performance indicators with the exception of Stanbic IBTC, which suffered decline in profitability. The top-five banks’ gross earnings rose by 9.79 per cent from N1.17 trillion in first half of last year to N1.29 trillion in first half of the year. Total pre-tax profit by the biggest five commercial lenders grew by 12.08 per cent to N416.55 billion in first half 2019 compared with N371.66 billion in comparable period of 2018. Total net profit, after taxes, increased by 13.22 per cent from N303.8 billion to N343.96 billion.
Average gross earnings within the top-five group had increased from N234.79 billion in first half 2018 to N257.77 billion in first half 2019. Average profit before tax also improved from N74.33 billion to N83.31 billion. After taxes, average net profit increased from N60.76 billion to N68.79 billion.
GTBank, Nigeria’s largest financial institution, remains the most profitable in terms of profit size and intrinsic profit-making capability. GTBank’s pre-tax profit margin- which measures the underlying profitability of a company’s operations, increased by almost four percentage points from 48.37 per cent to 52.19 per cent, more than 14 percentage points ahead of its closest rival on pre-tax profit margin. GTBank led on profitability with pre-tax profit and net profit after tax of N115.8 billion and N99.13 billion respectively.
Zenith Bank, Nigeria’s second most capitalised bank, maintains its lead as the bank with the highest gross earnings, grossing N331.6 billion within the first six months of this year. Access Bank, which consummated a landmark merger recently, took major leaps to become the second on the top-line ranking and third on profit-size chart.
Stanbic IBTC, which grew top-line by a modest 2.77 per cent, recorded the only dip in profitability within the top-five group. Stanbic IBTC’s pre-tax profit margin dropped from 44.42 per cent to 38.04 per cent, depressing the actual pre-tax profit from N50.73 billion to N44.65 per cent. After taxes, net profit declined from N43.08 billion to N50.73 billion. However, Stanbic IBTC will be paying the highest interim dividend of N10.24 billion, representing interim dividend per share of N1. GTB and Zenith Bank will pay interim dividend per share of 30 kobo each while Access Bank and UBA have announced interim dividend per share of 25 kobo and 20 kobo respectively.
Key extracts of the audited report showed that GTBank’s profit before tax rose by 5.6 per cent to N115.8 billion in first half of the year as against N109.6 billion recorded in the corresponding period of 2018. Profit after tax also improved from N95.58 billion to N99.13 billion. Gross earnings however declined from N226.63 billion to N221.87 billion. Earnings per share improved from N3.38 to N3.50.
Zenith Bank grew gross earnings by 3.0 per cent from N322.2 billion in first half of last year to N331.6 billion in first half of the year. Profit before tax rose by 4.0 per cent to N111.7 billion in first half of the year compared with N107.4 billion in comparable period of last year. After taxes, net profit rose from N81.74 billion in first half of last year to N88.88 billion in first half of the year. With this, earnings per share improved by 9.0 per cent from N2.60 to N2.83.
UBA’s profit before tax rose by 21 per cent while profit after tax increased by 29.6 per cent. Gross earnings had grown by 14 per cent. Profit before tax rose to N70.3 billion in first half of the year as against N58.1 billion in comparable period of 2018.
After taxes, net profit increased from N43.8 billion in first half 2018 to N56.7 billion. Gross earnings rose from N257.9 billion in first half 2018 to N293.7 billion in first half 2019.
Stanbic IBTC Holdings increased gross earnings from N114.21 billion in first half 2018 to N117.37 billion in first half 2019. Profit before tax however dropped from N50.73 billion to N44.65 billion. Profit after tax also declined from N43.08 billion to N36.25 billion. With these, earnings per share dropped from N4.16 in first half of last year to N3.42 in first half 2019.
Access Bank, which released its half-year results at the weekend, grew top-line by 28.1 per cent from N253 billion in first half 2018 to N324.3 billion in first half 2019. Profit before tax jumped by 61.6 per cent from N45.8 billion to N74.1 billion while profit after tax leapt by 59 per cent from N39.6 billion to N63 billion. Earnings per share thus improved from N1.38 to N1.94.