Major Nigerian banks listed on the Nigerian stock exchange have reported substantial interest income in the first nine months of 2023, driven by a significant increase in their aggregate loan books. The data compiled from the unaudited financial statements of the banks indicates that the ten commercial banks that released their Q3 financials experienced a 37.3% growth in loans to customers, increasing from N22.66 trillion in December 2022 to N31.1 trillion by the end of September 2023.
Other key findings include:
- Customer Deposits: Surged by N18.6 trillion to reach N61.99 trillion, compared to N43.37 trillion recorded in December 2022.
- Interest Income: Witnessed a substantial boost of N4.18 trillion, marking a 65.9% increase from N2.48 trillion in the corresponding period of 2022.
- Net Profit: Surged by 153% year-on-year to N1.93 trillion in the 9-month period of 2023 from N762.6 billion recorded in the previous year. However, a significant portion of the net income may not be paid as dividends due to the CBN directive to banks not to pay dividends from FX revaluation gains.
The robust performance is largely attributed to the impact of the devaluation of the official exchange rate, with the floating of the naira leading to a depreciation of the official rate from an average of N465/$ to around N750/$. The naira depreciated by 39% between January and September 2023, contributing to the surge in banks’ balance sheets.
Banks have also benefited from the high-interest rate environment maintained by the CBN to rein in inflation. The CBN’s benchmark interest rate increased from 16.5% in December 2022 to a record high of 18.75% in September 2023.
Loan Growth Highlights:
- UBA recorded the highest growth rate in loans to customers, growing its loan book by 57% to N3.14 trillion.
- Zenith Bank led in nominal growth, with an increase of N1.9 trillion, reaching N5.78 trillion.
- Access Bank maintained the top spot with the highest loans to customers at N6.7 trillion, representing a 31% increase.
- Unity Bank was the only bank to experience a decline in loans to customers, decreasing by 23% to N222.79 billion.
Interest Income Highlights:
- Access Bank recorded the highest interest income, totaling N1.04 trillion.
- Zenith Bank and UBA followed with N670.9 billion and N666.3 billion, respectively.
- GTCo recorded interest income of N374.6 billion, while Fidelity Bank earned N324.8 billion.
- Unity Bank recorded the least interest income at N33 billion.
The impact of FX revaluation gains and the high-interest rate environment contributed to the banks’ strong financial performance in the first three quarters of 2023.
