Amid elevated interest rates, growth in interest-earning assets, interest income of five Nigeria tier-1 banks grew to N3.28 trillion in the first nine months of 2023.
This is coming after macro-economic conditions during the reporting period suffered mixed sentiments. However, the banks including- Access Holdings Plc, FBN Holdings Plc, GTCO, UBA Plc and Zenith Bank, despite current FX illiquidity, soaring inflation, among others, managed to eke out impressive financial results from their interest income, revenues and profit during the reporting period.
Interest income is the amount paid to an entity for lending its money or letting another entity use its funds. On a larger scale, interest income is the amount earned by an investor’s money which an individual places in an investment or project.
For example, Access Holdings’ interest income crossed the N1.00 trillion mark in the year’s first nine months, growing by 83.3 per cent year-on-year (y/y) to NGN1.05 trillion. This translates to a rise in the group’s earnings assets to N14.55 trillion. As a result, the group recorded higher income across all contributory lines – investment securities (+165.1 per cent y/y to N531.84 billion), loans and advances to customers (+30.7 per cent y/y to N458.41 billion), loans and advances to banks (+202.7 per cent y/y to N37.48 billion), and cash and bank balances (+150.7 per cent y/y to N20.74 billion).
The group’s profit before tax (PBT) stood at 100 per cent y/y higher at N294.42 billion while its profit after tax (PAT) grew by 82.8 per cent y/y to N250.45 billion.
FBN Holdings Plc, for its part, delivered a 71.1 per cent y/y in interest income to N633.80 billion in 9 months largely driven by elevated yields in the fixed income and an increase in earning assets (+30.3 per cent YTD to N8.33 trillion). The bank’s gross earnings grew by 80 per cent from N547.20 billion to N985.60 billion while its PBT and PAT stood at N270.33 billion and N236.50 billion, respectively.
GTCO reported a 61.1 per cent y/y growth in interest income to N374.56 billion, driven by the impressive income from key contributory lines. In nominal terms, the group generated higher revenue from loans and advances to customers (+32.8 per cent y/y to N212.30 billion), investment securities (+78.8 per cent y/y to N112.51 billion), and placements with other banks (+414.1 per cent y/y to N49.74 billion).
The financial institution declared N367.42 billion profit in nine months of 2023 from N130.35 billion in nine months of 2022 and announced N433.2billion profit before tax in nine months of 2023, a growth of 155 per cent from N169.7billion in nine months of 2022.
For UBA, it recorded a 58.6 per cent y/y growth in interest income to N666.29 billion, driven by higher income recorded across all contributory lines. In nominal terms, UBA recorded higher income from investment securities (+76.5 per cent y/y to N298.06 billion), loans to customers (+36.5 per cent y/y to N297.31 billion), placement with banks (+225.1 per cent y/y to N43.61 billion), and loans to banks (+35.4 per cent y/y to N27.31 billion).
It reported N449.3 billion profit in nine months of 2023, a growth of 287 per cent from N116.04 billion in in nine months of 2022, while profit before tax hits N502.09 billion in nine months of 2023, an increase of 262.54 per cent from N138.49 billion reported in nine months of 2022.
For Zenith Bank, iabout N434.17 billion profit was generated in nine months of 2023, up from N149.05billion in nine months of 2022, while its profit before tax hit a record of N505.04billion in nine months of 2023, an increase of 149.05 per cent from N174.33 billion in nine months of 2022.
On the other hand, its interest income grew by 71.7 per cent y/y to N607.93 billion, mirroring elevated interest rates in the debt market.
Consolidating the banks’ interest income in 9 months, lifted it up to N3.28 trillion.
According to analysts, these reports indicate robust financial performances for the banks, driven by factors such as elevated interest rates, growth in interest-earning assets, and effective cost management.
Reacting to the performance, the banks expressed optimism about continued positive momentum for the remainder of the year. The Group Managing Director/CEO, UBA, Oliver Alawuba, remarked that the Group has once again shown sustainable and remarkable improvement in key performance metrics over the period, reflecting its commitment to delivering value to shareholders and various stakeholders.
He said, “This significant improvement is attributed to the impact of FX harmonisation, efficient balance sheet management, and our service-focused strategies. Our banking operations outside of Nigeria have continued to capture the broader business opportunities inherent across, and beyond Sub-Saharan Africa.
Looking ahead, we are optimistic that the growth trajectory will be sustained in the final quarter of the year as we remain focused on consolidating the gains achieved so far in delivering enhanced returns to our shareholders”.
SOURCE: THESUN
