Access Bank Nigeria Plc, the largest lender by total assets in Africa’s largest economy has recorded the fastest profit expansion among peers, surmounting the macroeconomic headwinds crimping the growth of business.
The lender is a close to displacing Zenith Bank as the most profitable financial institution, but the current economic reality is that a punitive regulatory environment is making it difficult for lenders to record strong earnings.
For the first three months through March 2021, Access Bank’s net income spiked by 28.39 percent to N52.54 billion, that compares with United Bank for Africa’s bottom line growth of 26.76 percent to N38.15 billon; Zenith Bank’s 5.02 percent increase to N53.06 billion.
But Guaranty Trust Bank, the largest lender by market capitalization, and First Bank Holdings saw net income dip by 9.09 percent and 32.49 percent to N45.54 billion and N15.62 billion respectively.
Despite a low yield environment brought on by the central bank’s monetary policies, Access Bank’s is the only Tier 1 lender to magnify revenue as interest income was up 9.04 percent to N143.79 billion as at March 2021 from N131.68 billion the previous year.
Drilling down the financial statement of Access Bank shows top line (revenue) got bolstered by uptick in investment securities such as short- and long-term government bonds.
Nigerian banks are facing challenges on many fronts, as a challenging operating environment, and increased competitive intensity—the pandemic that balloon loan loss expense, and currency devaluation continue to undermine the industry.
There has been incessant debit to their reserves by the central bank for missing out of the cash reserve ratio deadline, while they have not recovered from a dovish stance that sent net treasury yields tumbling.
The central bank downward revision to electronic banking fees, policy measures taken to stabilize the financial system and increase lending to stimulate the production of goods and services, have mounted pressure on banks’ earnings.
As a result of the aforementioned challenges, the 10 largest lenders collectively grew net income by 1.67 percent to N237.95 billion as at March 2021, the slowest growth in more than four years.