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Nigerian Banks Performance Metrics For Q1 2020

Bank Performance metrics

Today, we look at the Bank Performance Metrics and how some banks performed. The banking sector is one of the most competitive sectors and perhaps the most profitable sector in Nigeria. Although we have about 23 deposit money banks in the country, only a dozen are listed on the Nigerian Stock Exchange (NSE).

The financial research team of a veritable reportage tracked the Bank Performance Metrics using well-known data. Most of the data can be found in the financial statements of the banks. While tracking all banks, the following banks are included in the universal metric for financial performance. They are Access Bank, GT Bank, Fidelity Bank, FCMB, Sterling Bank, FBNH, Union Bank, Zenith Bank, UBA, Stanbic IBTC and Wema Bank.

This Bank Performance Metrics are based on the six (6) aspects; Total Assets, Net Assets, Total Deposits, Profit After Tax, Return on Average Equity, and Return on Total Assets. A cursory look is taken at the performance of the listed banks in Nigeria.

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Best Banks By Total Assets.

As in the first quarter of 2020, banking assets include equity plus bank deposits is a bank’s total assets. According to the data, 11 of the listed banks reported a combined total asset of N42.4 trillion. This represents a 10.3% rise from total assets of N38.4 trillion as of December.

The size of their total assets is directly proportional to how much support they can give to the Nigerian Economy. At N42 trillion total assets, the Banks amount for roughly 29% of Nigeria’s GDP of N145 trillion.

So who are the leaders?

First Position – Access Bank N7.28 trillion

Second Position– Zenith Bank – N7.12 trillion

Third Position – FBNH N7.02 trillion

Fourth Position – UBA N6.3 trillion

Conclusion:

Access Bank has maintained the number one position since 2019 after overtaking Zenith Bank following its merger with Diamond bank. However, Zenith bank’s asset jumped 12.3% in the first quarter of 2020 to N7.1 trillion compared to Access Bank’s 1.8% rise.

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Total Deposits

Perhaps one of the most competitive bank performance metrics to track are customer’s deposits. The more deposits a bank has the more money it can make.

The report shows that total banks’ deposits rose from N19.1 trillion in 2017 to N29.1 trillion in the first quarter of 2020. Whilst this is impressive growth, it did not adjust for the defunct Diamond Bank.

Thus, a better comparison would be between the N26.8 trillion in deposits recorded in December 2019 and N29.1 trillion in the first quarter of this year. This implies an 8.8% rise in just three months.

Top banks based on deposits:

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First Position – Access Bank, N5.6 trillion

Second Position – FBNH. N5.4 trillion

Third Position – UBA, N4.6 trillion

Fourth Position – Zenith Bank, N4.4 trillion

Conclusion:

UBA’s total deposits rose a whopping 14% to N4.6 trillion in the first quarter of 2020, adding about N467 billion in new deposits in just 3 months. An even more notable jump was from Stanbic IBTC with a 31.6% rise to N1.1 trillion in three months.  The bank broke into the N1 trillion club from N886 billion it had at the end of 2019.

The bank has now leapfrogged Sterling Bank and is on the heels of Fidelity Bank and FCMB. Fidelity Bank also impressed with a 10.4% rise in its numbers. FBNH, one of the oldest banks also rose 12.5% and at its rate could outpace the number one on the list, Access Bank.

Net Assets

The total equity or shareholders’ funds of a bank is its net assets. It includes the bank’s share capital, reserves, and its retained earnings in a period. One very strong metric for measuring how strong banks are is the Net Asset. The CBN uses it in assessing the banking sector’s ability to withstand credit losses.

At the end of Q1 2020, bank net assets rose from N4.64 trillion at the end of 2019 to N4.7 trillion. This presents a 1.4% rise over the three months period. However, this also represents a 20.5% jump from N3.9 trillion posted in 2018. Banks’ net assets are also circa 10% of their total assets.

The top 4 by Net Assets:

First Position – Zenith Bank, N925.9 billion

Second Position – FBNH, N680.3 billion

Third Position – GT Bank, N661 billion

Fourth Position – Access Bank, N635.5 billion

Conclusion:

There is a remarkable rise from FBNH and Stanbic IBTC; two bank holding companies. After falling 21.8% to N530.6 billion in 2018, FBNH clawed back 21% to N642.6 billion in 2019 and posted N680.3 billion as of March 2020. Also, Stanbic IBTC increased its net assets by 26.1% in 2019 to 302.2 billion respectively. The bank now has a net asset of N320.7 billion.

Zenith Bank at N925.9 billion is down from the N941.8 billion reported at the end of 2019. This may be due to dividend payments.

Return On Average Assets

This measures how well a bank is sweating its assets to generate profits. It is one thing for a bank to have all the assets in its balance sheet, but is it providing returns to all the providers of capital?

In general, banks reported a return on total assets of 2.3% in 2019 compared to 2.4% in 2018.

Best Banks based on ROAA

First Position – GT Bank, 5.6%

Second Position – Stanbic IBTC 4.2%

Third Position – Zenith bank, 3.4%

Fourth Position – UBA, 1.7%

Conclusion:

GT Bank is again the best bank based on Return on Average Assets at a whopping 5.6%. That just shows how well run the bank is. That it maintained this return in a struggling economy is even more remarkable.

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Return On Equity

Return on equity is an important metric used in assessing how well a bank has performed in terms of returns to shareholders. You can post the largest profits but just like any regular investment you want to know what that translates to in terms of return on equity capital.

Based on our pool of banks’ data, a return on average asset of 18.1% was achieved in 2019 compared to 17.5% a year earlier. This is higher than the inflation rate for 2019, higher than MPR, and just lower than banks’ lending rate.

How have they performed?

First Position – GT Bank, 31.2%

Second Position – Stanbic IBTC, 27.7%

Third Position – Zenith Bank, 23.8%

Fourth Position – Access Bank, 17.7%.

Conclusion:

Stanbic IBTC yielded the first place to GTB after catapulting to the top in 2018 with a return on average assets of 35%. It was interestingly the only notable drop from all the banks except Access Bank. Union Bank’s numbers increased from 6.3% to 10.2%, one of the most improved performances in 2019. We noted that FBNH broke the single-digit ceiling to 10.6% as the bank continues with its growth comeback. 

Profits After Tax

Corporate Profits are often viewed positively or negatively depending on how you view the impact of capitalism. For banks, it can attract scrutiny if it comes at the expense of small businesses or the wider economy. 

Nigerian banks reported a total profit after tax of N815.5 billion at the end of 2019. This, compared to N754.7 billion reported in 2018 and N630.3 billion in 2017.

Banks that declared the most profits.

First Position – Zenith Bank, N208.8 billion.

Second Position – GT Bank, N196.8 billion

Third Position – Access Bank, N97.5 billion.

Fourth Position – UBA – N89 billion

Conclusion:

Zenith Bank and GT Bank appear to have made more than double their closest rival. Both banks are almost at tie again in the first quarter with N50 billion in profits for GTB and N50.5 billion for Zenith Bank.

Wema Bank has a profitability growth year on year, with a 56.3% rise in profits to N5.2 billion. Union Bank also saw its profits rise by 34.7%. Others with significant profit increases in 2019 were Sterling Bank, FCMB, and UBA with 17.2%, 13.2%, and 13.3% respectively.

Based on the above Bank Performance Metrics analysis which bank is the best overall for the first quarter of 2020? We will like your thoughts in the comments.

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