Ten Deposit Money Banks in Nigeria reported a total profit of about N4.20 trillion in the first nine months of 2024. This profit marks a significant increase of 102.81% compared to N2.07 trillion earned during the same period last year, according to an analysis of their quarterly financial reports.
Among the banks that contributed to this impressive figure are major Tier-1 institutions such as Zenith Bank, Guaranty Trust Holding Company (GTCO), Access Bank, United Bank for Africa (UBA), and FBN Holdings. Other banks in the report include Stanbic IBTC Holdings, Sterling Bank, Ecobank, Wema Bank, and Jaiz Bank.
The surge in profits comes at a time when interest rates are at a historic high. The Central Bank of Nigeria (CBN) has been actively increasing the benchmark interest rate throughout the year, raising it from 18.75% at the beginning of 2024 to 27.25% currently. This strategy aims to combat inflation and stabilize the naira, Nigeria’s currency. The rise in interest rates has also led to record yields on fixed-income securities, which many banks have capitalized on to boost their earnings.
“The interest income has been a major driver of the surge in profits,” said Muyiwa Adejobi, the spokesperson for the Nigeria Police Force. “The banks have shown resilience and adaptability in navigating the current economic landscape.”
In the last two weeks, the four largest banks by market value—GTCO, Zenith Bank, UBA, and FBN Holdings—reported that their net interest income had more than doubled. Access Bank, recognized as the largest bank by assets, saw its net interest income soar by 116.65%, climbing from N389.96 billion last year to N844.84 billion this year.
Among the ten banks analyzed, GTCO emerged as the highest profit earner, reporting N1.09 trillion, a staggering increase of 195% from its September 2023 profit. Zenith Bank followed with a profit after tax of N827.28 billion, nearly double the N434.17 billion recorded last year. FBN Holdings also saw a substantial rise, with profits climbing to N533.88 billion from N236.42 billion.
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UBA reported a profit of N525.31 billion, while Ecobank announced a profit after tax of N491.88 billion. Access Bank recorded a profit of N457.75 billion, and Stanbic IBTC Holdings posted N182.87 billion, up from N109.249 billion. Sterling Bank and Wema Bank saw profits of N27.45 billion and N52.73 billion, respectively. Meanwhile, Jaiz Bank, a non-interest bank, reported a profit jump of 182.39%, reaching N18.11 billion from N6.41 billion.
While these banks celebrate their financial success, the Organised Private Sector (OPS) is expressing concern over the implications of rising interest rates on their operations. Following the CBN’s fifth rate hike this year, members of the OPS warned that the sustained increases could exacerbate the issue of bad loans within the banking sector.
Dr. Femi Egbesola, the National President of the Association of Small Business Owners of Nigeria, expressed his disappointment, stating, “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 meet their loan obligations.”
The Lagos Chamber of Commerce and Industry (LCCI) echoed similar sentiments, urging the government and the CBN to adopt a more balanced monetary policy. They highlighted the importance of controlling inflation while also considering the adverse effects on business operations and economic growth. The LCCI suggested that the government should release more capital expenditure to support business activities and foster economic growth.