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Top 5 banks inject N12.6trn into economy in 2020

A check on the contribution of top five Nigerian banks to economic growth and development in the financial year ended December 31, 2020 showed that about 50 percent of deposits which they garnered from customers were given out as loans and advances. In all, the banks gave out credits worth N12.57trillion out of N25.01billion received as deposits from customers. Shareholders of the banks were not left out as their investment in the banks was also modestly rewarded as dividend paid to ordinary shareholders stood at N219.36billion. Bamidele Famoofo reports.

Leading financial services groups in Africa’s largest economy, namely, Zenith Bank Plc, Access Bank Plc, GTBank Plc, United Bank for Africa Plc and FBN Holdings were major contributors to economic growth in the financial year ended December 31, 2020. Aggregate Loans and Advances from the financial groups to the economy in the financial year ended December 31, 2020 stood at N12.57trillion while Return on Investment (RoI) in terms of Dividend to owners of the business (shareholders) stood at N219.36billion in the same period. Financial institutions, especially banks, with massive deployment of technology, defied the menace of the Covid-19 which had very adverse impact on businesses in the financial year ended 2020 to make more money for their shareholders and also, obeying the directives of the Central Bank of Nigeria on the 65 percent Loan to Deposit Ratio (LDR) policy became more bullish in making credits available to businesses operating in the economy. ‘Banks are a critical intermediary in what is called the payment system, which helps an economy exchange goods and services for money or other financial assets. This comes along with making transactions much safer and easier; banks also play a key role in the creation of money’ the CBN noted. In the review period, the top five financial power houses grew in all parameters as Deposits from Customers grew to N25.01trillion while Total Assets increased to N37.48trillion. Shareholders’ Funds as at December 31, 2020 rose to N4.17trilion as total Gross Earnings of the banks stood at N3.12trillion. Gross Profit after Tax was N741.51billion in the review period.

Credit to Economy

Breakdown of the contribution of the individual banks to driving growth in the economy in terms of credits injected into businesses showed that Access Bank was more daring than its peers. The bank which has embarked on aggressive growth mission in the last 20 years with a very daring management team deployed N3.22trillion into the economy as loans and advances to its customers. The bank’s loans and advances portfolio as at December 31, 2020 represents about 57.6 percent of the deposits from customers. The value of the bank’s deposits portfolio from customers in the period was put at N5.59trillion, standing next to UBA Plc. Next to Access Bank Plc in terms of lending to the economy was Zenith Bank which disbursed 54.7 percent of deposits from customers to the economy in the review period. Zenith Bank disbursed N2.92trillion out of its N5.34trillion deposits it attracted from customers as at December 31, 2020, making it the second biggest lender to the economy. Third on the ranking of lending to the economy was Guaranty Trust Bank Plc otherwise known as GTBank Plc. Though the bank was the least aggressive in driving deposits from customers, it did far better than UBA Plc which was the biggest beneficiary in deposits from customers in the period. GTBank, a more conservative bank, gave out N1.66trillion as Loans and Advances out of a N3.51trillion deposits from customers, representing 47.3 percent of funds available for lending in its kitty. FBN Holdings followed GTBank closely with a Loans and Advances portfolio of N2.22trillion which accounted for 45.4 percent of its Deposits portfolio of N4.89trillion as at December 31, 2020. Least on the credit list was the United Bank for Africa Plc group which splashed N2.55trillion on the economy. The bank was less daring than its peers with its total Loans and Advances accounting for less than 45 percent of depositors’ funds in its kitty in the review. UBA Plc was the largest beneficiary from depositors with N5.68trillion in its coffers as deposits from customers as at December 31, 2020.

Return on Investment

In all the five financial groups gave out about N219.36billion to their various shareholders after they held their Annual General Meeting (AGM) as mandated by Law. Meanwhile, GTBank Plc emerged the most investor-friendly financial group among the five with about 41 percent of its Profit after Tax paid to shareholders as dividend in the financial year ended December 31, 2020. The GTBank group which declared a Profit after Tax of N201. 44billion in the review period paid out N82.41billion to shareholders as dividend. Zenith Bank Plc also paid out 38.12 percent of its PAT to shareholders as dividend in the same period. The group which emerged the most profitable among all the banks in Nigeria in the review period declared N230.57billion as Net Profit and paid out N87.91billion to the owners of the business as dividend. Both GTBank and Zenith Bank have remained the most attractive banks to investors over the years with a robust history of dividend payment. United Bank for Africa shared a dividend worth N33.17billion, representing 29.2 percent of its Net Profit to shareholders as dividend at the end of the financial year 2020. UBA Plc declared N113.77billion as Net Profit for the year ended December 31, 2020. FBN Holdings paid a dividend of N13.64billion to its shareholders which represent 15.2 percent of Profit after Tax in the period. The First Bank Holding Group announced N89.73billion as PAT in the financial year ended December 31, 2020. Access bank was however the least generous among its peers in the review period with dividend accounting for only 2.1 percent of Profit. The bank declared a profit to the tune of N106billion in the review period.

Shareholders’ Funds

Contribution of shareholders to the business of the financial groups in form of equity is more robust in Zenith Bank as shareholders as at December 31, 2020 had injected N1.2trillion equity into the balance sheet. It’s a reflection of the level of confidence of the shareholders in the credibility of both the Board and Management of the institution. GTBank has the second largest contribution of shareholders to the Assets of the bank with N814.4billion in shareholders’ funds as at December 31, 2020 while FBN Holdings ranked third with N765.2billion. Access Bank and the United Bank for Africa Plc accounted for N751billion and N724.2billion respectively as shareholders’ equity in their business.

Revenue

The revenue drive of Access Bank was next to none in the review period with Gross Earnings from its business operations standing at N764.72billion. Zenith Bank made total revenue of N696.55billion to rank next to Access Bank while UBA cinched the third position with N620.4billion, recording a 10.8 percent increase compared to the figure in same period in 2019.FBN Holdings was ahead of GTBank with total revenue standing at N579.4billion as at December 31, 2020. GTBank, which ranked the least on the list of the top five banks, declared gross revenue of N455.23billion.

Ranking by Assets

The Access Bank Plc group remains the biggest bank in the country measured by Total Assets. As at December 31, 2020, the bank’s total Assets portfolio stood at N8.67trillion ahead of Zenith bank’s N8.48trillion. UBA Plc and FBN Holdings are very close with N7.7trillion and N7.69trillion declared as total assets in the review audited financial year period. GTBank with the least assets base has N4.94trillion in its kitty. In all, the top five banks amassed N37.48trillion in total assets in the period.

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