The 2024 Proshare Bank Strength Index (PBSI), which used the FY 2023 results of banks, identified Access Corp, Zenith, FBNH, ETI, UBA, and GTCO, the so-called FUGAZE, as tier-one banks. Proshare analysts observed that banks were pursuing increasingly aggressive approaches to acquiring digital market share while supporting lower operating costs (lower cost-to-income ratios (CIRs)), which showed up in the 2023 PBSI, where Access Corp ranked highest amongst its tier 1 counterparts. Still, GTCO fell a few notches because of relative weakness in key indicators such as asset size and growth. Contextually, the PBSI is a multi-dimensional index that evaluates banks' strength based on key financial and non-financial metrics such as asset quality, risk management, efficiency, and governance. 

Similar to the FY 2023, the H1 2024 PBSI ranking shows a strong performance among Tier 1 banks, with Access Corp maintaining its lead, followed by Zenith, ETI, and FBNH. Unlike the FY 2023, where FBNH ranked third, it dropped a notch to fourth place while ETI climbed from fourth to third, while others maintained their ranking. Access and Zenith Banks' dominance was driven by their capital base, asset quality, risk management, and strong earnings. At the rear of the Tier 1 spectrum, UBA and GTCO showed efficiency and governance strength. However, they fell short in asset size, loan quality, and capitalisation, which weighed down their overall rankings (see Table 1 below).

Table 1:

The progress from FY 2023 to H1 2024  underscores the efforts of these banks to adapt to economic changes, particularly regulatory adjustments and revisions, ongoing recapitalisation exercises, and FX fluctuations. If the H1 2024 truly preempts the FY 2024 ranking, the critical factors for sustaining Tier 1 status will remain, solid risk-adjusted capital ratios and enhanced efficiency through lower cost-to-income ratios (CIRs). As digital channels become even more central to banking operations, the capacity to increase digital income will also distinguish leading banks. Sound governance framework, including board composition and diversity, will also continue to play a pivotal role in determining the resilience and adaptability of these institutions in a fast-evolving financial landscape like Nigeria’s (see Table 2 below).

Table 2:

Access Corp

Access Corp's inorganic expansion model fast-tracked its growth, becoming the Nigerian banking industry’s asset size, deposits, and loan book leader. The total assets surpassed N30trn in H1 2024, settling at N36.60trn, while deposits and its loan book climbed to N27.35trn and N12.28trn in H1 2024, respectively. Leveraging the Central Bank of Nigeria’s (CBN’s) aggressive monetary tightening and currency depreciation, the group saw half-year 2024 gross earnings rise to N2.20trn, near its full-year 2023 gross earnings of N2.59trn. The larger gross earnings cushioned its higher operating costs and allowed a triple-digit growth in pre-tax profit to N348.92bn in H1 2024. The positive numbers spread to some financial ratios, such as ROE, ROA, NIM, NPL, and CIR, but other ratios, such as cost of risk and cost of the fund, had adverse outcomes. 

Following the CBN’s directive on recapitalisation, the Holdco has started its capital-raising, offering 17.772bn ordinary shares of 50kobo to existing shareholders at N19.75k to raise N351bn. Reports suggested the issuance was oversubscribed, and the N351bn raised will close the group’s capital gap. 

FBN Holdings

FBNH saw its gross earnings rise by 118.76% to N1.40trn, and pre-tax earnings rose to N411.99bn in H1 2024. Its H1 performance was driven mainly by net interest income (NII) and net fair value gains on FVTPL, which absorbed shocks from a foreign exchange revaluation loss of N165.05bn in H1 2024 (from 98.14bn in H1 2023) and rising operating expenses of N445.70bn. The HoldCo’s revaluation loss exempts it from the Finance Ministry’s 70% windfall tax.

FBNH’s current Tier 1 capital of N251.00bn shows a capital gap of N249bn to retain its international license. On April 30, 2024, the Holdco disclosed its plans to meet its capital gap by raising N300bn through a blend of Rights Issue, Private Placement and IPO. Additionally, FBNH announced a Share Sale and Purchase Agreement (SPA) to divest its 100% equity stake in its wholly-owned subsidiary, FBNQuest Merchant Bank Limited. 

United Bank for Africa

UBA’s half-year 2024 gross earnings climbed to N1.37trn, but larger interest, other operating expenses, and hyperinflation monetary loss pinched profit. The Profit before tax fell by -0.15%, and the profit after tax saw a larger decline of -16.36% due to a +235.34% rise in income tax expense. This mildly affected most of the group’s financial ratios, leading to lower return on assets (ROA) and equity (ROE), higher CIR, cost of funds, cost of risk, in addition to rising nonperforming loans (NPLs). The UBA group has not announced a capital raise programme to fill its N385bn tier 1 capital gap. 

Ecobank Transnational Incorporated

The banking group’s continental structure has strengthened its ability to absorb adverse risks across subsidiaries and generate solid financial performances. Therefore, ETI saw top-line and bottom-line earnings grow by triple digits to N1.86trn and N311.02bn, driven by continental monetary tightening and cross-continental currency depreciations. The Holdco had larger foreign revaluation gains and interest income from Anglophone West Africa (AWA), Central, Eastern, and Southern Africa (CESA), and Francophone West Africa (UEMOA), which offset the relatively weak performance of the Nigerian subsidiary. 

ETI has yet to issue any information about the recapitalisation of its Nigerian subsidiary. The Nigerian subsidiary holds a national license and is expected to have a tier 1 capital base of N200bn by 2026.

Zenith Bank

Zenith Bank’s increased off-balance-sheet transactions complemented its income from its core lending operations to generate a positive H1 2024 result. The group’s earnings grew to N2.10trn in H12024, above its industry average earnings, leveraging a 176.45% increase in interest earnings due to increasing MPR. This, in turn, drove a 107.51% rise in its profit before tax to N727.03bn and total assets to NN27.58trn in H1 2024. 

The group began its capital-raise exercise with the announcement of a hybrid offer of 5,232,748,964 shares at N36.00 per share Rights Issue and 2,767,251,036 shares at N36.50k per share Initial Public Offer (IPO), making a total of N260bn in capital raise following the CBN's announcement of the need for industry recapitalisation. The issuance reduces the group’s capital gap to N84.71bn to retain its international license. 

Guaranty Trust Holding Company Plc

GTCO maintained its cost efficiency, generating N1.00trn profit (PBT) from N1.39trn gross earnings in H1 2024. Both interest and non-interest income drove the growth in gross revenues. Regarding financial position, the group’s total assets, loans, and deposits rose to N14.51trn, N3.11trn, and N10.55trn in H1 2024. 

GTCO issued nine billion shares to the public at N44.50 in August to raise N392bn. The combination of the current share capital of N138.19bn and the newly raised N392bn will exceed the new N500bn minimum capital requirement for an international banking license. 

Fidelity Bank

Fidelity Bank’s gross earnings (N512.86bn) and profit-after-tax (N159.84bn) increased by 107.55% and 157.85%, respectively, driven by higher interest and non-interest income. The positive numbers improved the group’s financial ratios except for NPLR and cost of risk, which increased to 3.50% and 2.10%, respectively. The group’s total assets, loans, and deposits increased to N7.9trn, N3.75trn and N5.38trn, respectively. 

Fidelity Bank commenced raising its capital in June, issuing 3.20bn ordinary shares of 50 kobo each to existing shareholders via Rights Issue and ten billion ordinary shares of 50 kobo each as IPO to raise N127bn. The issuance was oversubscribed and would reduce the capital gap to N243bn to meet the international banking license requirement. 

FCMB Group Plc

FCMB had a positive 2024 half-year performance, with gross earnings and profitability rising to N374.47bn and N64.21bn. The group had N35.29bn as FX revaluation gain in H1 2024, -30.98% lower than N50.99bn in H1 2024, but the +281.49% increase in net trading income to N31.38bn became a buffer and sustained profitability growth. Total assets grew to N5.95trn in H1 2024.

The group issued 15,197,282,219 ordinary shares of 50 kobo each at N7.30 per ordinary share of N0.50K each to raise N110bn. Adding the current capital of N125bn and the newly raised N110bn will reduce its funding gap to N265bn. 

Stanbic IBTC Holdings Plc

Stanbic IBTC’s Gross earnings grew by 77.44% to N378.55bn in H1 2024, and profit before tax rose to N116.34bn. The gross earnings can be decomposed into 64% interest income and 36% non-interest income. The positive numbers improved the group’s financial ratios, with better NPLR, ROE, ROA, and COR, but CIR and NIM were lowered. The HoldCo’s total assets rose by 18.59% to N6.10bn, with deposits at N2.90trn and loans at N2.17trn in H1 2024. 

Stanbic IBTC’s current Tier 1 Capital, at N109.00bn, indicates a funding gap of N91trn. On May 16, 2024, the group announced plans to raise an additional N150bn capital through a right issue.

Sterling Financial Holdings Company Plc

In H1 2024, Sterling Holdco’s gross earnings rose to N152.20bn, benefitting from higher interest and non-interest income. The higher earnings absorbed the elevated operating expense, generating a 51.39% rise in PBT to N 17.35bn in H1 2024. Similarly, the group’s total assets rose by 31.45% to N3.01trn in H1 2024, driven by a 26.065% rise in loan assets to N1.10trn. Total deposits increased to N2.23trn.

On September 18, 2024, the group announced a 7.5 billion share right issue of 1 for every four shares held at N4.00k per share, which is still ongoing to raise N30 billion. With a capital of N57.15bn, the group will have a funding gap of N112.85bn to retain its national license.

Wema Bank

Wema Bank’s broader interest and non-interest income drove gross earnings and profit above their five-year averages, settling at N89.63bn and N26.59bn, respectively. The earnings growth was accompanied by a double-digit increase in total assets, loans and advances and stronger customer penetration at N2.76trn, N973.92bn, and N2.12trn, respectively. The positive income strengthened financial ratios, reflecting improved cost minimisation, better asset quality, and shareholder funds utilisation. 

Based on the recapitalisation exercise, Wema has raised N40bn through a Rights Issue and is expected to raise an additional N150bn through a public offer (IPO) or special placement. 

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