Assets of Nigeria’s tier 1 banks have risen by N4 trillion to more than N46 trillion, the latest internal audits of the leading banks, otherwise known as systemically important banks, confirmed yesterday.
The tier 1 banks are regarded as the fulcrum of the nation’s finance and economic system. They are referred to as the “too big to fail” banks because of their importance to the economy.
The banks control more than three-quarter of the banking assets and they are seen as representatives of the entire banking system.
A market intelligence report by The Nation showed that the balance sheet size of the banking system remained resilient with all the major banks expanding their assets base, a measure of strength and possible lending capacity.
The report was based on the latest internally-audited reports of the banks, which were submitted to financial services regulators and the investing public.
According to the report, the total assets of the top tier banks rose from about N42.2 trillion at the beginning of the year to more than N46 trillion by the end of the third quarter ended September 30, 2021.
The banks include: United Bank for Africa (UBA); Zenith Bank International; Access Bank; Guaranty Trust Holdings Company (GTCO); Stanbic IBTC Holdings; Union Bank of Nigeria (UBN) and First Bank of Nigeria Holdings (FBNH). The third quarter balance sheet of FBNH financial statement, currently being auditing, was derived from estimate based on its half-year report.
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The report showed percentage increase of between three and 19 per cent across the sector, with Access Bank leading the expansion with 19.4 per cent growth over the nine-month period.
UBA’s total balance sheet expanded from N7.70 trillion in December 2020 to N8.35 trillion by September, an above average increase of 8.5 per cent. Zenith Bank grew its balance sheet by 3.2 per cent from N8.48 trillion to N8.75 trillion. Access Bank led the banks, in terms of assets, with N10.37 trillion in September 2021 as against N8.68 trillion in December 2020.
Others included GTCO, which expanded by 4.0 per cent from N4.95 trillion to N5.14 trillion. Stanbic IBTC Holdings recorded above average increase of 10.6 per cent from N2.49 trillion to N2.75 trillion. Union Bank of Nigeria (UBN), a first generation bank, grew its total assets by 16.9 per cent from N2.19 trillion to N2.56 trillion.
FBNH’s total assets had risen from N7.69 trillion in December 2020 to N8.02 trillion by June this year. Its balance sheet is expected to be some N8.2 trillion by the third quarter.
Most analysts have noted the steady performance of the Nigerian banking sector, pointing out the resilience of the banking assets and profitability in spite of macroeconomic headwinds.
Analysts at Cordros Capital Group, a major investment banking group, said the performance of Access Bank showed “strong earnings growth” , noting that “top-line performance trickled down to the bottom-line, allowing the bank to record a second consecutive quarter of double digit earnings growth”.
According to the analysts, Access Bank’s performance remains impressive in the challenging and dynamic economic environment, with stable Interest rates likely to result in further growth in funded income by the end of the year.
They also noted impressive earnings performance by UBA during the nine-month period, pointing out that the “bank’s core segment has continued to support the growth in profitability consequent on higher income from loans, lower funding and impairments costs”.
“The bank (UBA)’s sustained growth in earnings in the face of challenging industry conditions remains impressive. In the last quarter leading up to full-year results, we expect the momentum in earnings growth to be sustained as more efforts are made to accelerate risk assets and reinvest maturing assets at higher yields.
“Similarly, we also expect improvements in the major non-funded income components and operational efficiencies to further propel earnings.”