Monday, 04 November 2024 03:51

10 banks rake in N4.2tn profit amid factory closures, business failures

Rate this item
(0 votes)

Ten Deposit Money Banks raked in N4.20tn in the first nine months of this year, an analysis of their quarterly financial reports has indicated.

The banks listed on the Nigerian Exchange Limited saw their profit for the period climb by 102.81 per cent to N4.20tn from N2.07tn recorded at the end of the third quarter in 2023.

The financial institutions include Tier-1 banks: Zenith Bank, Guaranty Trust Holding Company, AccessCorp, United Bank for Africa and FBN Holdings. Others are Stanbic IBTC Holdings, Sterling Bank, Ecobank, Wema Bank and Jaiz Bank.

This surge in the profits of the banks is coming amid high interest rate

The Central Bank of Nigeria has consistently increased the benchmark interest rate at each of its five Monetary Policy Meetings held this year.

Thus far, the CBN has increased the rate from 18.75 per cent at the start of the year to 27.25 per cent purportedly to rein in inflation and strengthen the devalued naira. Also, record yields on fixed-income securities, mainly taken up by banks, have contributed to the bottom line of the banks.

The lenders that released their financial statements for the period ended September to the NGX showed that interest income was a major driver of the surge in profits.

Over the past two weeks, the country’s four largest banks by market value — GTCO, Zenith Bank, UBA and FBN Holdings, all reported that net interest income had more than doubled. In the case of Access Bank which is the largest bank by assets, net interest income rose by 116.65 per cent to N844.84bn from N389.96bn as of last year.

Of the 10 lenders reviewed, GTCO reported the highest amount of profit at N1.09tn, which is about a 195 per cent increase from its September 2023 figure.

GTCO was followed by Zenith Bank with a profit after tax of N827.28bn, almost double the N434.17bn made in the previous year.

FBNHoldings also saw its profit rise to N533.88bn from N236.42bn. UBA’s profit hit N525.31bn; Ecobank reported a profit after tax worth N491.88bn; and Access Bank came with a N457.75bn profit.

Similarly, Stanbic IBTC Holdings reported N182.87bn from N109.249bn; Sterling Financial Holding Company and Wema Bank recorded double and triple profits of N27.45bn and N52.73bn, respectively. A non-interest bank, Jaiz Bank indicated that its profit after tax jumped by 182.39 per cent to N18.11bn from N6.41bn.

While the banks reap the benefits of a high-interest rate environment, the Organised Private Sector is lamenting the effect of the sustained hike on their activities.

After the MPC announced the fifth rate hike for the year, members of the Organised Private Sector expressed fears that the interest rate hike may worsen bad loans in Deposit Money Banks.

The National President of the Association of Small Business Owners of Nigeria, Femi Egbesola, said it was unfortunate that the increase was coming again when manufacturers and actors in the real sector were still grappling with the high cost of doing business among many other challenges.

He said, “This will definitely push up further the cost of doing business and ultimately, the cost of goods and services. The manufacturing sector may contract more as fund liquidity and profitability will surely reduce.

“The banks or financial institutions may witness more bad debts as many lenders may find it difficult to live up to their loan obligations. This will result in banks being averse to lending to the real sector.”

The Lagos Chamber of Commerce and Industry had earlier voiced similar concerns.

The LCCI urged the government and the CBN to consider a more balanced approach to monetary policy, saying while controlling inflation is crucial, mitigating adverse effects on business operations and economic growth is imperative.

The chamber then suggested that the government release more capital expenditure to reflate business activities and support the contribution to economic growth.

 

Punch

November 04, 2024

10 banks rake in N4.2tn profit amid factory closures, business failures

Ten Deposit Money Banks raked in N4.20tn in the first nine months of this year,…
November 03, 2024

Nigerian-British of Yoruba parentage, Kemi Badenoch elected leader of UK Conservative Party

The UK’s battle-scarred Conservatives on Saturday elected “anti-woke” candidate Kemi Badenoch as its new head,…
October 31, 2024

The No. 1 misconception about failing

Aditi Shrikant There are few massive success stories that didn’t start out with some sort…
November 02, 2024

This startup helps parents-to-be select embryos for ‘designer babies’ with higher IQ, other traits

American start-up Heliospect Genomics is charging wealthy parents-to-be up to $50,000 to screen their embryos…
October 27, 2024

That simple 'hi' text from a stranger could be the start of a scam that…

“Pig butchering" operations run out of Asia but target victims globally, with scammers promising love…
November 04, 2024

What to know after Day 984 of Russia-Ukraine war

WESTERN PERSPECTIVE Russian drone attack on Kyiv damages buildings, power lines, Ukraine says A Russian…
October 16, 2024

The AI revolution: How Predictive, Prescriptive, and Generative AI are reshaping the world

Bernard Marr In the ever-evolving landscape of artificial intelligence, three powerful forces are reshaping our…
October 27, 2024

Nigeria awarded 3-0 win over Libya after airport fiasco

Nigeria have been awarded a 3-0 victory over Libya, and three vital points, from their…

NEWSSCROLL TEAM: 'Sina Kawonise: Publisher/Editor-in-Chief; Prof Wale Are Olaitan: Editorial Consultant; Femi Kawonise: Head, Production & Administration; Afolabi Ajibola: IT Manager;
Contact Us: [email protected] Tel/WhatsApp: +234 811 395 4049

Copyright © 2015 - 2024 NewsScroll. All rights reserved.