- A new report has unveiled Nigeria’s most profitable banks by Return on Equity (RoE) as banks push for new funds
- Guaranty Holding Company Plc (GTCo) and the United Bank for Africa (UBA) as emerged as Nigeria’s most profitable banks in 2023
- GTCo increased its RoE of 44.82%, while UBA recorded an RoE of UBA followed closely at 41,20% from 19.70% reported in 2022
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.
Following impressive earnings, Guaranty Trust Bank Holding Company Plc (GTCo) and the United Bank for Africa (UBA) have emerged as Nigeria’s most profitable banks by Return on Equity (ROE) in 2023.
RoE refers to the ratio that provides investors understanding of how efficiently a company handles shareholders’ funds.
Credit: Novatis
Source: UGC
Top-performing banks with the best RoE
Findings show that GTCo declared a 44.82% RoE from the 18.65% it recorded in 2022.
The bank’s 23.61% RoE growth shows efficiency in income generation and development from its shareholders amid a challenging operating environment.
The bank disclosed that its performance remained solid and responsive despite high inflation and FX risks.
The bank’s total dividend payout was N3.20k for the 2023 financial year, a three-percent increase from the N3.10k paid to shareholders the year before.
UBA followed closely at 41,20% from 19.70% reported in 2022.
UBA’s 2023 reported N757.7 billion profit before tax, a 277% from the N200.9 billion in 2022.
BusinessDay reports that the bank’s profit after tax stood at N607.7 billion in 2022, representing 257% growth from the N170.3 billion reported in 2022.
Wema Bank leads other top performers
Other banks with strong ROEs above 30% include Wema Bank, with 39.28% ROE in 2023, up from 19.28% in 2022, and Zenith Bank, with 36.60% ROE in 2023, up from 16.80% in 2022.
Others include Access Holdings Plc, which had 36.20% ROE in 2023, up from 13.30%, and Stanbic IBTC, which had 30.60% ROE in 2023, up from the 20.30% it reported in 2022.
Sterling Bank’s records decline in RoE
ThisDay reports that Sterling Financial Holdings Company Plc reported the lowest RoE in the year under review, at 12.8%, down from 13.3% declared in 2022.
The bank recorded a 9.3% increase in pre-tax profit to N22.7 billion in 2023 from N20.8 billion in 2022 and an 11.8% increase to 75 kobo from N0.67k in 2022.
Sterling Financial Holdings Company recorded a growth of 9.3 per cent in profit before tax to N22.7 billion in 20233 from N20.8 billion in 2022 and an increase of 11.8 per cent in profit after tax to N21.6 billion from N19.3 billion in the previous year, while earnings per share also grew by 11.9 per cent to 75k from N0.67kobo in 2022.
Banks push for new capital
Nigerian banks are aggressively raising funds to meet the minimum capital requirements imposed by the Central Bank of Nigeria (CBN).
The minimum capital required by banks operating in Nigeria was reviewed upward according to a directive by the apex bank.
The statement was signed by the director of the financial policy and regulation department, Haruna Mustafa.
In a statement to all commercial, merchant, and non-interest banks and promoters of planned banks, the bank allowed 24 months (starting on April 1, 2024, and ending on March 31, 2026) to comply with the new rule.
Based on the revised minimum capital base, commercial banks with international licenses must now achieve the N500 billion minimum capital requirement.
Another Bank set to begin operations in Nigeria
Legit.ng previously reported that the management of NOVA Merchant Bank Limited has disclosed that the bank has transitioned to a national bank after securing the required approval from the Central Bank of Nigeria (CBN).
The bank’s Board Chairman, Philips Oduoza, disclosed that the bank’s full commercial operations will begin in July and spread to other parts of Nigeria.
The NOVA bank chairman disclosed this when the board and management visited the Lagos State Governor, Babajide Sanwo-Olu.
Source: Legit.ng