While Access and Zenith led in revenue, profit and e-business, only UBA managed to pare down its impaired assets in the first half.
In the first half of 2021, Nigerian lenders were confronted with the gruelling task of finding their way to recovery. A year earlier, the emphasis had been on escaping the ravages of the pandemic outbreak and then survival.
The five biggest banks by asset -
Improvement was modest and not dramatic for the banks across key performance indicators, given that they were not coming from a very low base point a year earlier.
Revenues were not particularly strong as a higher interest rate environment in HY2021 meant higher cost of funds for lenders, which hurt earnings unlike the corresponding period of last year, marked by lower interest rates and lower cost of funds. The shift also had implications for a number of key performance parameters of these lenders.
"On aggregate level revenues were not very strong as we saw change in market dynamics this year," said
"Most banks have also struggled to grow their interest income this year. That is also coming on the back of the flattish loan growth coming from a year when most banks had to grapple with Covid-19. Most of them are cautious in growing their loan book and that has impacted interest income."
BANKS BY REVENUE
That only two out of the Big 5 banks reported expansion in gross earnings in the first six months while the rest posted a contraction is symptomatic of the difficult operating environment within which banking business was conducted between January and June.
This helped shore up both interest income and fees and commission income, the same factors that boosted the revenue performance of UBA, the other bank recording improvement in gross earnings.
The other three posted declines in gross earnings primarily on account of drop in their interest income, with GTCO reporting as much as 7.6 per cent negative growth in top-line.
"We've seen a sharper than expected contraction in interest income," said Timchang Gwatau, research analyst at
"There were lots of expectations given where we're coming from last year and given the fact that the yield environment had shown signs of improvement as at the beginning of the year. So there were expectations that interest income was going to do a lot better than we have seen so far."
BANKS BY PROFIT
Improvement in profitability for the period was broader than that of revenue as all the banks but one reported growth. An expansion of 9.4 per cent or N32 billion was reported in the banks' consolidated profit, standing at N371.1 billion.
Even though Zenith reported the biggest profit of N106.1 billion, it only managed a 2.2 per cent growth.
BANKS BY E-BUSINESS INCOME
In a bid to cushion the impact of dwindling earnings, lenders continued to ride on the e-banking boom that characterised the coronavirus lockdowns of last year, which forced many bank account holders to embrace electronic banking products as a timely alternative to banking hall transactions.
That trend seems to be gaining momentum given that the Big 5 banks reported an increase of 51 per cent in e-business income for half year, with that earnings category contributing N115.8 billion to their revenues.
Zenith made the fastest advance at 91 per cent, while
At N29.9 billion, Access earned the biggest income from e-products.
BANKS BY ASSET
The asset valuation of the Big 5 banks rose 14.1 per cent or N4.9 trillion to N39.9 trillion at the end of June compared to full-year 2020.
With asset worth N10.1 trillion,
That had been largely supported by a number of acquisitions it completed in markets within
Zenith posted the smallest asset growth within the period, marginally increasing by 0.4 per cent.
Even though all the biggest five lenders saw a jump in their asset value, the size of their impaired assets remains a big issue that the independent auditors of some of the banks highlighted in their reports.
The impaired loans (loans whose principal and interest are not likely to be repaid) of the banks rose by 5.3 per cent to N616.7 billion between January and June, a reflection of how much the coronavirus crisis has hampered borrowers' ability to fulfil their repayment obligations.
Only UBA managed to pare down its impaired assets, which it reduced by 12.7 per cent.
At N178.6 billion,
Zenith, whose impaired assets surged by 10.5 per cent to N151.1 billion, highlighted
"Slow growth in lending rates and fixed income yields in H2:2021 are expected to constrain earnings" for banks,
Copyright Premium Times. Distributed by AllAfrica Global Media (allAfrica.com)., source