As per the financial reports spanning January to September 2023, Nigerian banks are poised to surpass their anticipated profit margins for the year.
Based on the 9M 2023 financial results tracked by Nairametrics, most banking institutions listed in the NGX have achieved a net profit margin higher than their profit margins for FY 2022.
For the nine months ending September 2023, the bank achieved a net profit margin of 15.71%, a 413 basis points increase from the 11.59% profit margin achieved by the bank throughout 2022.
During the nine months, the bank recorded a gross earning of N1.59 trillion, a 15.26% growth from the N1.38 trillion recorded in FY 2022. Also, the bank recorded a net income of N250.4 billion which was 56.3% higher than the N160.2 billion recorded in FY 2022.
The growth in revenue during the nine months is linked to the N1.048 trillion interest income the group generated during the period.
GTCO, the holding company of GT Bank is also projected to exceed its profit margin expectations for 2023. During the nine months ending September 2023, the group has recorded a net profit margin of 43.21%, against the 31.37% profit margin achieved during the 2022 fiscal year.
In just nine months of 2023, GTCO has recorded a gross earning of N850.33 billion, which is 57.69% higher than the N539.24 billion gross earning recorded in FY 2022.
During the same period, the group achieved a net income of N367.4 billion which was 117.2% higher than the N169.2 billion recorded in FY 2022.
FBN Holdings, the holding company of First Bank Limited is another banking group on track to exceed its profit margin expectations for 2023. During the nine months ending September 2023, the group recorded a net profit margin of 21.86%, which is a significant improvement from the 16.91% recorded in FY 2022.
With a net income of N236.5 billion recorded in the nine months ending September 2023, the group has far exceeded the N136.2 billion posted as net income in the 2022 fiscal year.
Within the nine months ending September 2023, Zenith Bank has achieved a net profit margin of 32.67%, a significant improvement from the 23.70% achieved in FY 2022. In 9M 2023, the bank posted a gross earning of N1.329 trillion, which is 40.56% higher than the N945.6 billion achieved during the 2022 fiscal year.
During the nine months, the bank also recorded a net income of N434.2 billion, which is 93.8% higher than the N224 billion achieved in FY 2022.
UBA achieved a net income of N437.5 billion in the nine months ending September 2023, being the company with the highest net income in Nigeria this year. The net income posted in 9M 2023 was 157% greater than the N170.3 billion recorded in FY 2022.
For the nine months ending September 2023, the bank recorded a profit margin of 33.43%, a significant improvement from the 19.96% net profit margin recorded throughout 2022. Hence, the bank is on track to beat its profit margin outlook for 2023.
Other notable mentions
Fidelity Bank – 9M 2023 net profit margin of 23.60%, against FY 2022 net profit margin of 12.49%.
FCMB – 9M 2023 net profit margin of 24.13%, against FY 2022 profit margin of 11.00%
Stanbic IBTC – 9M 2023 net profit margin of 32.67%, against FY 2022 profit margin of 28.11%
What you should know
A significant determinant underlying the substantial gross earnings witnessed by Nigerian banks from January to September is the increased interest income attributed to the rising interest rates throughout 2023.
According to the data available to Nairametrics, tier-1 banks in Nigeria (Access Bank, GT Bank, First Bank, Zenith Bank, and UBA) recorded a cumulative interest income of N3.394 trillion in the nine months ending September 2023, representing a 70.9% year-on-year growth from the same period in 2022.
Another significant source of income for banks this year has been the forex revaluation gains due to the devaluation of the Naira. For tier-1 banks, they posted a cumulative income of N897.2 billion from forex revaluation gains in 9M 2023.
However, there is a caveat. In September 2023, the CBN stopped banks from utilizing the gains from forex revaluation for dividend payments and operational expenditures.
