Despite challenging operating conditions, six banks that have released their Half Year (H1) results for the period ending June 30, 2024, have surpassed their 2023 performance. They reported a combined profit before tax of N979.19 billion, marking a 133% increase from the N421.04 billion recorded in the corresponding period of 2023.
These banks, 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, major players in the sector, 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 release their audited H1 2024 results.
In 2023, these six banks reported a profit before tax of N854.21 billion, reflecting a 93.08% increase from the N442.42 billion reported in the 2022 financial year.
The significant growth in profit before tax during the review period was driven by a sharp rise in interest income and non-interest income, attributed to the Central Bank of Nigeria’s (CBN) hike in the Monetary Policy Rate (MPR).
The operating environment during this period was intense, characterized by double-digit inflation and continued tightening of monetary policy, which drained liquidity in the banking system, among other challenges.
Analysts attribute the banks’ strong financial performance to the devaluation of the naira. Many banks with international affiliations hold a significant portion of their assets in dollars, leading to substantial profit increases due to the devaluation, according to Vice President of Highcap Securities Limited, Mr. David Adnori.
“In the history of banking, hardly any bank has declared PBT of up to N400 billion in a half-year period. However, due to the devaluation and the transition to a freely floating exchange rate, banks have seen a significant spike in their profits in the first half of 2024,” he said.
He added that a large portion of this increased profitability is derived from non-interest income. The devaluation has affected fees, commissions, off-balance sheet transactions, and other non-interest income sources, contributing significantly to the banks’ higher profits.
“According to their financial statements, a significant portion of their profits comes from non-interest income, and this portion has grown in recent periods,” he added.
Investment Banker & Stockbroker, Mr. Tajudeen Olayinka, also noted that a significant portion of the banks’ recent profit gains came from revaluation gains on their net long US dollar positions.
He explained that most banks have structured their balance sheets to maintain net long dollar positions, allowing them 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 a currency revaluation, it positively impacts their profits,” Olayinka said.
A breakdown of the banks’ results shows that Ecobank reported N443.5 billion PBT in H1 2024, a 195.06% increase from N150.3 billion in H1 2023, while FBN Holdings posted N411.99 billion PBT in H1 2024, a 100.9% increase from N205.05 billion in H1 2023.
Ecobank Group CEO, Jeremy Awori, stated, “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 5% 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 53.6%.”
Similarly, FBN Holdings’ Group Managing Director, Nnamdi Okonkwo, remarked, “FBN Holdings has again delivered strong financial results despite the complex macroeconomic and operating environment. Our Group’s strong performance over the period is underpinned by our robust institutional capabilities, effective risk management practices, and solid business momentum, a testament to our resilience.
Notably, gross earnings and profit before tax grew 118.8% year-on-year and 100.9% year-on-year to N1,402.5 billion and N412 billion, respectively, for the first half of the financial year, reflecting our ongoing commitment to improving profitability and delivering sustainable value to our stakeholders.”
FCMB Group declared N64.21 billion PBT in H1 2024, a 68% increase from N38.23 billion in H1 2023. Wema Bank reported N30.57 billion PBT in H1 2024, a growth of 153.47% from N12.06 billion in H1 2023.
Sterling Financial Holdings Company generated N17.35 billion PBT in H1 2024, representing a 51% increase from N11.46 billion in H1 2023. Jaiz Bank reported N11.56 billion PBT in H1 2024, a 194.27% increase from N3.93 billion in H1 2023.
 results for the period ending June 30, 2024, have surpassed their 2023 performance. They reported a combined profit before tax of N979.19 billion, marking a 133% increase from the N421.04 billion recorded in the corresponding period of 2023.){kind=link}