The most liquid and capitalised banks have posted record profit underpinned by a high yield environment and foreign exchange revaluation gains, paving the way for a potential bumper payout for shareholders later down the line.
Data gathered by MoneyCentral shows the combined net income or profit after fax (PAT) of listed lenders surged by 164.40 percent to N2.04 trillion as at September 2023.
That compares with 18.31 percent growth at the bottom line (profit) in 2022; 2021, (+1.02 percent); 2020, (+16.37 percent); 2019, (11.93 percent); 2018, (14.61 percent), and 2017, (18.19 percent).
Historical data has shown that lenders’ earnings soar whenever the central bank hikes interest rates as they earn more in net interest income-which is the difference between the revenue a bank earns from its interest-bearing assets and the expenses of its interest-bearing liabilities- and the devaluation of the currency led huge foreign exchange gains.
To tame inflation that has risen to 26.72 percent, the CBN has increased the monetary policy rate (MPR) by 0.50 per cent to 18.50 per cent.
The Naira has lost over 4o percent of its value since the central bank liberalized the foreign exchange to spur foreign investment.
Investors have been rewarding banks for their stellar performance as evidenced with improved asset quality and robust earnings even as manufacturers, drug makers, and agric firms are feeling the pang of a tough operating environment.
Access Holdings has gained 101.95 percent since the start of the year, while FBN Holdings has a year-t0-date (YTD) of 64.22 percent; GTCO, (+51.30 percent); UBA, (+175 percent), and Zenith Bank, (+38.13 percent).
With most analysts expecting banks to deliver an outstanding performance to end the year (FY) 23, shareholders will be expecting an increment in dividends.
Access Holdings, GTCO, Zenith Bank, and UBA have paid N58.17 billion in interim dividends to their shareholders in 2023.