There are indications that the sluggish economic environment may have taken a toll on tier-1 banks forcing their aggregate topline figures into negative position in the first half of 2018, H1’18.
The banks, namely First Bank of Nigeria Plc, United Bank for Africa Plc, Zenith Bank Plc, Guaranty Trust Bank Plc and Access Bank Plc recorded a decline of about -0.9 percent in their HI’18 gross earnings at N1.285 trillion down from N1.296 trillion recorded in the corresponding period, HI’17.
But their counterparts in the tier-2 category have a good showing during the period as Financial Vanguard review of banks quoted on the Exchange shows that the tier-2 banks grew their earnings by 6.6 percent to N867.589 billion up from N814.038 billion.
Also the tier-2 banks outperformed the tier-1 in profitability as they recorded a 40.3 percent increase in Profit Before Tax, PBT, as against 6.3 percent rise recorded by tier-1 banks, a situation both market operators and stakeholders have attributed to efficient management of cost and higher deployment of technology.
The stellar performance of tier-2 banks also is an indication that they are fast closing the gap between it and tier-1 banks in terms of growth trajectories in topline and bottomline.
Market operators and stakeholders have said that despite the lower yield in the financial instruments, lower Foreign Exchange, FX volatility, and harsh operating environment in the country, the tier-1 banks and tier -2banks have performed well.
Data released by the National Bureau of Statistics, NBS, in the review period showed the frail state of the economy as with a significant drop in Gross Domestic Product, GDP, to 1.5 percent Year-on-Year, YoY in Q2’18, against 1.9 recorded for Q1’18.
Financial Vanguard review of the period, shows a combined growth rate of both Tier-1 and Tier-2 banks listed on the Exchange, in the H1’18, at 2.0 and 14.3 percent growth in earnings and PBT respectively.
Earnings and PBT were N2.153 trillion and N 505.337 billion respectively, up from N2.110 trillion and N442.209 billion in the corresponding period of 2017.
The tier-1 banks in absolute term accounted for 59.7 percent and 71.2 percent of the total gross earnings and PBT in H1’18 respectively.
Sector Review Analysis A cursory review of the banking sector by Financial Vanguard shows that the 12 banks captured in this study recorded the total gross earnings of N2.152 trillion in H1’18 . This comprises of the following banks: UBA- N257.918 billion, GTBank- N226.632 billion, Zenith […]