Five of Nigeria’s largest banks, Zenith Bank, Guaranty Trust Holding Company, United Bank for Africa, Stanbic IBTC, and Fidelity Bank, reported record-breaking profits in their 2024 full-year financial results despite an economy struggling with inflation, naira depreciation and declining consumer purchasing power.
According to the analysis by Punch newspaper on Tuesday, the five lenders collectively posted a post-tax profit of N3.317tn.
However, some economists who spoke with The Punch newspaper cautioned that when these profits are converted to dollars, the figures paint a different picture, given the naira’s depreciation of approximately 70 per cent against the dollar since May 2023.
The report noted that UBA’s profit after tax climbed 26.14 per cent to N766.6bn, up from N607.7bn in 2023. Another tier-one lender, Zenith Bank, recorded a post-tax profit of N1.03tn, a 52.5 per cent increase from the previous year’s N676.9bn.
GTCO, the parent company of GTB also posted a staggering N1.017ty n profit, reflecting an 88.4 per cent rise from N539.6bn in 2023, while Stanbic IBTC Holdings Plc also recorded strong growth, with post-tax profit rising 60.23 per cent to N225.3bn. Meanwhile, Fidelity Bank’s profit soared 179.63 per cent to N278.1bn.
“The devaluation of the naira has significantly impacted banks. Many of them hold dollar-denominated assets, which, when converted to naira, contributed to their reported gains. However, this does not necessarily reflect real economic growth, former Zenith Bank Chief Economist Marcel Okeke said.
While banks have benefited from currency devaluation, other sectors of the economy continue to struggle.
At least 10 multinational companies have either shut down or relocated from Nigeria since 2023, citing currency volatility, rising operational costs, and economic uncertainty. GlaxoSmithKline, Equinor, and Unilever Nigeria are among the notable exits.
However, it should be noted that the naira has remained relatively stable against the US dollar since December 2024, due to CBN’s reforms promoting transparency in the foreign exchange market. As of Friday, the local currency traded at approximately N1,536/$1 in the official market.
Okeke said these lenders had also invested heavily in government instruments, such as treasury bills, which further affected their performance on a positive note.
“Breaking down their balance sheets, you may likely realise that interest income was a significant contributor to their gains,” he said.
GIK/APA