Despite the tough operating clime, six banks that have so far released their results for the Half Year (H1) ended June 30, 2024, surpassed their 2023 performance, posting N979.19 billion profit before tax, about 133 per cent increase over the N421.04 billion reported in corresponding period of 2023.
The banks, which are listed on the Nigerian Exchange Limited (NGX) include; Ecobank Plc, FBN Holdings Plc, Wema Bank Plc, Jaiz Bank Plc, FCMB Group Plc and Sterling Financial Holdings Company Plc.
However, sector giants such as Access Holdings Plc, Zenith Bank Plc, United Bank for Africa Plc, Guaranty Trust Holdings Company Plc Stanbic IBTC Holdings Plc and Fidelity Bank Plc, are yet to announce their audited H1 2024 results.
The six banks had reported N854.21 billion profit before tax in 2023, representing an increase of 93.08 per cent from N442.42 billion reported in 2022 financial year.
Their profit before tax growth during the period under review was driven by significant increase in interest income and income from non-interest income on the back of the Central Bank of Nigeria (CBN) hike of Monetary Policy Rate (MPR).
Operating environment was intense in the period under review, influenced by double-digit inflation rate, sustained hike in monetary policy parameters that drain liquidity in the banking system, among other challenges.
Analysts attributed the banks' financial performance to the devaluation of the naira. They said most banks have international affiliations, with a significant portion of their assets denominated in dollars.
As a result, the devaluation has led to a substantial increase in their profits," said Vice President, Highcap Securities Limited, Mr. David Adnori.
"In the history of banking, hardly any bank has ever declared PBT of up to N400 billion in a half-year period. However, due to the devaluation and the transition from a pegged exchange rate to a freely floating one, banks have experienced a significant spike in their declared profits in the first half of 2024," he said.
He added that a substantial portion of this increased profitability of these banks is attributed to non-interest income. The devaluation has affected fees, commissions, off-balance sheet transactions, and other non-interest income sources, which now contribute significantly to the banks' higher profits.
"According to their financial statements, a significant portion of their profits is derived from non-interest income, and this portion has grown in recent periods," he added.
Speaking, Investment Banker & Stockbroker, Mr. Tajudeen Olayinka said a significant portion of the banks' recent profit gains came from revaluation gains on their net long US dollar income positions.
He stated that most banks have structured their balance sheets to maintain net long US dollar positions, which means that they are able to record gains whenever the currency is adjusted.
"Most tier-one banks currently hold a net long position in USD. This means that their foreign currency assets exceed their currency liabilities. Consequently, whenever there is currency revaluation, it will positively impact their profits," Olayinka said.
Meanwhile, a breakdown of the banks' results revealed that Ecobank reported N4443.5billion PBT in H1 2024, about 195.06 per cent increase from N150.3billion in H1 2023, while FBN Holdings posted N411.99 PBT in H1 2024, an increase of 100.9 per cent from N205.05 billion reported in H1 2023.
CEO of Ecobank Group, Jeremy Awori in a statement said: "Our half-year results demonstrate the strength of our diversified business model. Despite facing macroeconomic challenges in some of our operating markets, the company increased its net revenues to $994 million and its profit before tax by five per cent to $324 million.
"Our transformation agenda remains our top priority, with a focus on improving customer experience and driving efficiency and productivity. Despite persistent inflation, we achieved an efficiency ratio of 53.6per cent."
On his part, the Group Managing Director, FBN Holdings, Nnamdi Okonkwo in a statement said, "FBNHoldings has again delivered a strong set of financial results despite the complex macroeconomic and operating environment.
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"Our Group's strong performance over the period is underpinned by our robust institutional capabilities, effective risk management practices and solid business momentum, and it is testament to the resilience of our institution.
"Notably, gross earnings and profit before tax grew 118.8per cent y-o-y and 100.9 per cent y-o-y to N1,402.5 billion and N412 billion respectively for the first half of the financial year, showing a continuous growth trajectory. These results reflect our ongoing commitment towards further improving profitability, enhancing performance and delivering sustainable value to our stakeholders."
While FCMB Group declared N64.21 billion PBT in H1 2024, about 68 per cent increase from N38.23billiion in H1 2023, Wema Bank announced N30.57 billion PBT in H1 2024, a growth of 153.47 per cent from N12.06 billion reported in H1 2023.
Sterling Financial Holdings Company generated N17.35billion PBT in H1 2024, representing 51 per cent increase from N11.46 billion in H1 2023, as Jaiz Bank in H1 2024 announced N11.56billion PBT, an increase of 194.27 per cent from N3.93 billion reported in H1 2023.
