GTCO, UBA are Most Profitable Lenders in Nigeria

Guaranty Trust Bank Holdings Company (GTCO) Plc and United Bank for Africa (UBA) Plc are more efficient in generating profit for their owners than peer rivals, while Banks have remained resilient amid a challenging environment.

For instance, data gathered by MoneyCentral Intelligence shows GTCO and UBA recorded return on average equity (ROAE) of 44.45 percent and 44.37 percent respectively.

That compares with Zenith Bank’s ROAE’s (35.10 percent); Fidelity Bank’s (33.52 percent); FBN Holdings, (26.61 percent); Stanbic IBTC Holdings, (30.92 percent); Wema Bank, (25.51 percent); Access Bank, (23.62 percent), and Sterling Bank 13.75 percent.

Unity Bank Plc recorded a negative ROAE. The lender is reeling from recurring loses that render it technically insolvent and analysts are asking questions about the going concerns of the lender.

All in all, the average industry ROEA rose to a record 55.60 percent in September 2023 from 10.96 percent the previous year.

Banks have benefitted from higher interest rates and currency devaluation that jerked up dollar denominated assets (foreign exchange gains), which places them in the position to pay bumper dividends to their shareholders.

The stock market has rewarded banking stocks as the NGX Banking index has a year to date (YTD) gain of 72.50 percent, outperforming the broader index.

Zenith Bank has a YTD gain of 40 percent; United Bank for Africa or UBA, (+169.74 percent); GTCO; (+53.48 percent); Fidelity Bank, (+106.90 percent); First City Monument Bank Plc, (+62.34 percent); FBN Holdings, (+66.60 percent), and Access Holdings, (+102.35 percent).

Banks have an attractive valuation, which is an ideal entry point or buying opportunity for investors since these lenders guarantee steady dividend that is income stream.

Zenith Bank has a price to earnings multiples of 2.18; UBA, (1.41); GTCO, (2.66 percent); FBN Holdings, (2.29); Access Holdings, (3.07 percent).

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