Following their stellar performance in the 2012 financial year, Guaranty Trust Bank Plc, Zenith Bank Plc, Access Bank Plc and FBN Holdings Plc have emerged the most profitable Tier 1 banks in Nigeria.
According to a report by Agusto & Co, the Nigerian banking industry’s profitability has returned to pre-crisis levels. An analysis of the report showed that the Nigerian banking industry’s net earnings grew remarkably by 75 per cent in 2012. Pre-tax profits increased almost ten-fold to â‚¦539 billion in the same period.
For the first time since 2009, no bank posted a pre-tax loss. As a result, the industry‘s pre-tax return on assets and equity improved to 2.5 per cent and 21 per cent respectively; compared with the 0.3 per cent and 3.4 per cent recorded in 2011.
“Based on Agusto & Company’s assessments, tier1 banks consisting Zenith Bank Plc, FBN Holdings Plc, United Bank for Africa (UBA) Plc, Guaranty Trust Bank Plc and Access Bank Plc are the most profitable banks in the Nigerian banking Industry, as all tier1 banks achieved pre-tax ROE in excess of 20 per cent in 2012. Prior to the crisis, the banking industry recorded pretax return on average assets of 3 per cent while pretax return on average equity stood at 23 per cent by year-end 2007,” it stated.
The report also revealed that the banking industry non-performing loans declined on the back of sale of delinquent loans to Asset Management Corporation of Nigeria (AMCON), write-offs, aggressive recoveries by the banks as well as cautious approach to loan growth by most banks.
The Agusto & Co report also revealed that the lowest non-performing loans to total loans ratio was recorded by Citibank Nigeria Limited, while Enterprise Bank recorded the highest NPL ratio of 26.1 per cent.
They added that: “Agusto & Co believes the estimate Gross Domestic Products (GDP) growth rate of 6.75 per cent will positively impact the banking industry. We anticipate that in the short to medium term as banks seek high yielding assets to compensate the loss of ancillary income and declining yields on government securities, non-performing loans will start to creep up. Nevertheless, we do not anticipate it will reach a double digit mark save for a systemic or political crisis.”
Source: Thisday Live