More than a year ago since Nigeria recorded her first confirmed case of COVID-19, the country has endured the economic hardship and disruption of livelihood that followed.
The Nigerian banking sector has managed to keep her head above the COVID-19 waters in the face of the first and second waves of the virus.
Nonetheless, the pandemic worked in favour of the Nigerian banking sector, especially the five biggest banks as Nigerians increasingly rely on mobile banking for transactions and avoid banking halls for fear of contracting Covid-19.
Nigeria’s largest bank by total assets and customer base, Access Bank Plc reported a 13.6 percent increase in gross earnings to N450.6 billion from N396.7 billion, by far the best performing of all the banks in 2021.
Access Bank appeared to have achieved this feat by aggressively increasing its loan book from N3.6 trillion to N3.9 trillion. However, the most significant impact on gross earnings was its earnings from commission and fees which rose to N58.7 billion from N40.5 billion. Access Bank appears to be leveraging its asset base to drive revenue growth.
But while Access Bank raked in billions in gross earnings, its loan losses remained high at N28.6 billion in the first half of this year compared to N29.6 billion incurred last year. This has been a major strain on the bank’s profitability.
Nigeria’s most valuable bank by market value and second most profitable bank, GTCO which in 2021 adopted the HoldCo structure, last year reported a 7.65 percent decline in gross earnings.
As published in the company’s audited half-year report, its gross earnings for the first half of 2021 fell from N225.14 billion in the corresponding period of 2020 to N207.91 billion.
The reason for the decline was because net interest income fell by 16.11 percent from N127.62 billion in the first half of 2021 to N107.06 billion in the first half of 2021.
Zenith Bank gross earnings for the half-year of 2021 decreased by 0.15 percent from N346.09 billion in 2020 to N345.6 billion.
Based on its audited interim report for the half-year ended June 2021, the bank’s Interest income declined from N216.9 billion in the first half of 2020 to N203.9 billion in the same period this year. Zenith also reported a significant increase in net commission and fees growing from N33.5 billion to N47.6 billion. This helped mitigate the drop in interest income.
Zenith Bank also grew its customer deposits to N5.7 trillion from N5.3 trillion at the end of 2020.
The gross earnings of Nigeria’s third most profitable bank, United Bank for Africa Plc rose from N300.6 billion to N316 billion, while assets rose from N7.7 trillion to N8.3 trillion.
This is one of the few banks that recorded higher gross earnings year on year in 2021, impressively recording a much lower loan impairment going from N7.8 billion last year to N4.1 billion in the period under review.
Deposits by customers crossed the N6 trillion mark as well, growing by 7.4 percent to N6.1 trillion in the period under review, compared to N5.7 trillion as of December 2020.
UBA also recorded significant growth in its net commissions and fees income growing from N38.5 billion to N45.7 billion.
GTCO’s augmented the drop from receiving higher commissions and fees compared to the year before but it was not enough. To make matters worse, its operating expenses also rose in the first half of the year affecting its profits.
Thus, profit before tax fell by N166.58 million to N93.06 billion, and earnings per share dropped to N2.79 from N3.32.
According to reports from First Bank of Nigeria Holdings Plc, one of Nigeria’s oldest banks, gross earnings during the first half was N291.2 billion (-1.7 percent year over year).
A 22 percent decline in Interest Income caused by a 56 percent drop in Investment Securities Income led to a slight earnings drop.
FBNH also earned significant revenue from commissions which rose from N46.7 billion to N57.3 billion helping it compensate for the lower-income earned from interest on loans.
FBNH also showed strong growth in net earnings from commission and fees going from N46.7 billion to N57.3 billion, one of the highest in the sector.
Operating expenses surged up by 9.6 percent y/y, as all major contributory lines spiked – personnel expenses (+3.4 percent y/y to N51.24 billion), AMCON levy (+35.4 percent y/y to N30.68 billion), and NDIC premium (+9.4 percent y/y to N6.81 billion).
FBN Holdings is confident that it will continue to deliver innovative solutions that will enrich customer experiences as well as deepen financial inclusion, despite these negative factors negatively impacting overall revenue generation.
