Nigeria: Banks Earn More than N260 billion profits in Q1 2020

• A total of twelve banks listed on the Nigerian Stock Exchange (NSE) have collectively posted a net profit after tax of N260.983 billion, in Q1 2020. This amid strong indications that the earnings from the Q2 2020 will be substantially lower.
• Tier-1 banks in Nigeria (or FUGAZ as they are often called) dominated the list of top performers. Zenith bank topped this list with a N50.5 billion profit.
• The likes of Jaiz Bank Plc, Aso Savings, Unity Bank Plc and Aso Savings and Loans Plc have yet to release their financials from Q1 2020.

A total of twelve banks listed on the Nigerian Stock Exchange (NSE) have collectively posted a net profit after tax of N260.983 billion, in Q1 2020. Although this is remarkable, there are clear indications that the earnings from the Q2 2020 will be substantially lower.

Tier-1 banks in Nigeria (or FUGAZ as they are often called) dominated the list of top performers. As usual, with N50.5 billion, Zenith Bank Plc recorded the most profit over the period. This is closely followed by Guaranty Trust Bank Plc, which reported a net profit of N50.1 billion after tax. Access Bank Plc recorded N40.9 billion while N30.1 billion was reported by United Bank for Africa. FBN Holdings Plc also reported a N25.7 billion after-tax profit.

The Q1 2020 profit after tax for the rest of the banks is specified below:

Further analysis of banks’ Q1 2020 financial statements revealed that the likes of Ecobank, Fidelity, Sterling, and Wema Bank witnessed slight declines in their profit after tax year on year. For instance, Ecobank’s profit declined by as much as 10% when compared to some N30.5 billion that was recorded in Q1 2019. Fidelity Bank’s profit of N5.8 billion is less than N5.9 billion that was reported in Q1 2019. Similarly, Sterling Bank reported N3.2 billion worth of profit in Q1 2019, whereas its profit declined to N2 billion in Q1 2020. Also, Wema Bank’s profit in Q1 2019 was N1.1 billion. This is more than N977.3 million that the bank reported in Q1 2020.

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Meanwhile, the likes of Jaiz Bank Plc, Aso Savings, Unity Bank Plc and Aso Savings and Loans Plc have yet to release their financials from Q1 2020. Since 2013 Aso Savings has released no financial statements. The most recent financial statement released by Unity Bank was for Q3 2019. On the other hand, Jaiz Bank recently issued its audited Financial Statements for the full year 2019.

Remember Nigeria was officially struck by the coronavirus pandemic in March 2020. What this means is that as far back as then, many companies, including banks, began feeling the negative impacts. Yet some of them were able to register relatively positive performances. However, there have been forecasts suggesting that the performance of banks in Q2 and the remainder of the year is after all not so positive.

A recent study by Augusto & Co noted, that earnings and profitability for Nigerian banks are expected to decline dramatically in 2020. In particular, banks’ earnings from their core business are projected to decline in the short term due to an expected increase in impairment charges and lower yields on their lending books. In addition, the CBN’s contractionary monetary policy stance, exacerbated by discretionary Cash Reserve Requirement (CRR) debits, is believed to impact the overall performance of banks this year.