Introduction:

Q1. Comparison of Banking in Nigeria

An overriding feature of the Nigerian banking industry is the high lending rate which is another
significant reason why the real sector cannot obtain adequate credit for expansion despite the set of
policy reforms undertaken in the sector. The spread between the savings and the lending rate was not
pronounced prior to 1986 when the economy was liberalized. Available statistics revealed that the
lowest spread of 2.25 was recorded in 1985. Thereafter, the spread between the two rates started
widening as a result of the interest rate deregulation policy embarked upon from 1986 onwards. As
highlighted in Figure 2, the lending rates from commercial banks are well above 20% between 1989 and
2004 as a result of the liberalization policy embarked on during the period. This sometimes goes as high
as about 35%. The lending rate averaged 18.81% between 2005 and 2008 due to the bank consolidation
exercise of the period (Figure 2). The rate again resumed an upward trend in 2009 as the second part of
the bank consolidation exercise took-off. This is in sharp contrast with the deposit rate that is very low
and declining. This huge difference has been used to justify why banks are often declaring large profits
but sectors like manufacturing and agriculture are managing to survive in the country. Arguments also
subsist on the level of hidden charges that banks usually placed on their loans. Charges such as valuation
of collaterals, evaluation of feasibility reports and any other technical support services are charged as
part of the fees for loans to be advanced to the private sector. The end result therefore is that the
borrower ends up paying much more than the interest rate charges on the loan. This practice persists in
the sector despite the CBN directive on excess charges. Another dominant feature of the banking
industry is the high percentage of non-performing loans. A higher percent of such loans shows that
banks have difficulty collecting interest and principal on their loans. This may lead to less profit for the
banks in Nigeria and, possibly, bank closures. The average value of the banks' nonperforming loans to
total gross loans in Nigeria between 2000 and 2011 was 18.14 percent with a minimum of 7.2 percent in
2008 and a maximum of 36.1 percent in 2009 ( Figure 3). In addition, a comparison of this variable with
other developed economies highlights the precarious state of the Nigerian situation (Figure 4). The huge
non -performing loan recorded in 2009 was a result of commercial banks' huge exposures to oil/gas and
margin loans, which were largely non-performing. The huge NPL in this period led to a near system
collapse of the banking sector which possibly could have been avoided if the bulk of the lending had
gone to the productive sector of the economy. According to CBN (2009) other factors that caused the
crisis was the recall of foreign credit lines by correspondent banks, withdrawal of foreign portfolio
investments from the system and the absence of a robust liquidity risk management framework. See
Ajakaiye and Tella (2014) and Ajakaiye and Fakiyesi (2009) for further elaborations on these and related
issues. To address the problem, the CBN and the Federal Ministry of Finance spearheaded the
establishment of the Asset Management Corporation of Nigeria (AMCON) to purchase non-performing
loans from deposit money banks and recapitalize the affected banks.

Q2. Comparison of Banks in Nigeria

Twelve of the major Deposit Money Banks listed on the Nigerian Exchange posted an aggregate profit
after tax of N1.07 trillion in 2022, representing a 6.4% increase when compared to N1.01 trillion
recorded in the previous year.

The significance of the banking industry in Nigeria cannot be overstated due to its pivotal role in
allocating capital from surplus regions or sectors to limited sectors through the provision of credit
facilities to the real sector.

How the sector performed in 2022

The Nigerian banking industry grew by 17.24% in real terms in 2022, representing the fastest growth
recorded in 10 years.

The only time the banking industry recorded such fast-paced growth was in 2012 when it grew by 29.4%
in real terms.

- Additionally, the Nigerian banking industry is one of the major growth drivers of the Nigerian
economy, contributing 3% to the aggregate GDP with a nominal value of N6.05 trillion (2022 estimate).

- The sector plays host to some of the biggest companies listed on the Nigerian equities market, with
the likes of Zenith Bank. GT Bank and Stanbic IBTC are part of the elite list of companies on the NGX
known as NGX 30.

- According to an analysis by Nairalytics, five of the most profitable Nigerian quoted companies in
2022 were commercial banks while two of the 10 most valuable companies in the country are also
banks.

- However, despite the impressive GDP growth, the sector only managed to grow by 2.81% in the
stock market in the review year.

Meanwhile, the increased level of competition in the Nigerian banking industry has helped spur
innovation, through service delivery as well as improvement in their top and bottom lines respectively.

In light of this, Nairametrics presents a ranking of the best-performing Nigerian commercial banks listed
on the NGX in 2022.

Leading Banks by Profits After Tax (PAT) growth

The twelve banks posted an aggregate profit after tax of N1.07 trillion in 2022, a 6.4% increase
compared to N1.01 trillion recorded in the previous year. The banks were able to increase their margin
despite economic challenges affecting most business entities in the country.
Union Bank recorded the highest gain (growth) in terms of year-on-year growth with a 54.1% increase to
N29.8 billion, followed by FCMB with 48.8% to N31.1 billion. However, Unity Bank saw its profit after tax
decline by 57.5% to N3.17 billion to claim the bottom position.

Meanwhile, Zenith Bank recorded the highest post-tax profit of N223.9 billion, followed by UBA and GT
Bank with a net profit of N170.33 billion and N169.2 billion respectively.

First position – FBN Holdings (-1.8%)

Second position – Access Holdings (-0.9%)

Third position – GTCo (-0.85%)

Fourth position – UBA (-0.5%)

Fifth position – Union Bank (0.3%)

Upshot: Net profit serves as a crucial indicator for assessing a company’s performance, reflecting its
operational profitability. The declared net profit directly influences shareholder payouts by banks,
thereby establishing it as a pivotal performance metric considered by stakeholders.

Leading Banks by Asset Growth

The aggregate asset value of the twelve banks under consideration increased by a whopping 22.6% from
N58.55 trillion recorded as of the end of 2021 to N71.78 trillion by December 2022. This is largely driven
by an increase in loans to customers by the banks.

Zenith Bank recorded the highest growth in terms of total assets with a 30% increase, followed by
Access Holdings with 27.8%. On the flip side, Unity Bank recorded a 5.1% decline in its asset value in the
period under review.

It is worth noting that in terms of asset value, Access Holdings boasts as the largest banking firm in
Nigeria with N14.99 trillion, followed by Zenith Bank and UBA with N12.29 trillion and N10.86 trillion
respectively.

First position – Zenith Bank (+30%)

Second position – Access Holding (+27.8%)

Third position – UBA (+27.1%)

Fourth position – Wema Bank (+22.7%)

Fifth position – Fidelity Bank (+21.6%)

Upshot: Asset growth is a crucial indicator in assessing a bank’s performance. An increasing asset base
shows that the bank has been successful in securing new loans and deposits, which boosts interest
revenue. Monitoring asset growth is therefore essential to determining a bank’s success and
sustainability since it offers insightful data on the general health and performance of the bank.

Leading Banks by Change in Returns on Average Equity (ROAE)

The analysis by Nairalytics revealed that 8 of the twelve banks improved on their ROAE in the period
under review, while four of them recorded a decline compared to 2021.

Specifically, Stanbic IBTC recorded the highest improvement at 5.5% points from 15.1% to 20.6%.

Stanbic IBTC was followed by UBA with an improvement of 4.2% points to land at 19.7% in 2022
compared to 15.5% recorded in the previous year.

However, Access Holdings recorded the highest decline of 4.4% to stand at 13.4% in the review year.

In terms of the most profitable bank in 2022 based on ROAE, Stanbic IBTC tops the list with 20.6%,
followed by UBA with 19.7%.

First position – Stanbic IBTC (+5.5%)

Second position – UBA (+4.2%)

Third position – Union Bank (+3.3%)

Fourth position – FCMB (+3.1%)

Fifth position – Fidelity Bank (+2.6%)

Upshot: ROAE is a key metric that evaluates the profitability and efficiency of a bank in generating
returns for its shareholders.

It measures the bank’s ability to generate profits from the capital invested by its owners.

A higher ROAE indicates that the bank is utilizing its equity effectively to generate income and maximize
shareholder value.

Leading Banks by Growth in Customer Deposit

The banks recorded a 25% increase in customer deposits in 2022, closing the year at N47.74 trillion from
N38.18 trillion recorded at the end of the prior year.

Zenith Bank recorded the highest growth in terms of customer deposits, with a staggering increase of
38.7% year over year to N8.97 trillion, followed by Access Holdings with a 33% growth rate to N9.25
trillion, while Unity Bank recorded the least growth with 1.6% to N327.4 billion.

Access Bank boasts of the highest customer deposits amongst the listed banks, accounting for 19.4% of
the total deposits in the books of the twelve banks.
First position – Zenith Bank (+38.7%)

Second position – Access Holdings (+33%)

Third position – Fidelity Bank (+28%)

Fourth position – Wema Bank (+25.7%)

Fifth position – FCMB (+25.1%)

Upshot: Customer deposits are an important metric for banks to track as they serve as a fundamental
source of funding for the bank’s lending activities and other operations.

Monitoring customer deposits provides valuable insights into the bank’s liquidity position and its ability
to meet the financial needs of its customers.

Final scorecard – UBA IS OUR BEST PERFORMING BANK FOR 2022

The final ranking allocated varying weights based on the Nairmetrics Weighted Index (NWI) to each of
the metrics considered in this analysis, which positioned UBA as the best-performing bank in 2022 with
a weighted average of 3.65 points.

The company ranked first in one category, second in one, third in two, fourth in two, sixth and seventh
position in one category each.

Stanbic IBTC followed with a composite score of 4.5 points, ranking first in two categories, second in one
category, and third in one category. FCMB ranked third with an aggregate index point of 5.2.

Data were sourced from the various audited accounts and investor presentations publicly released by
the banks.

Ecobank Transnational Incorporated was not included in the study due to the size of its operation in
Nigeria, while Jaiz Bank was exempted as a result of the unavailability of complete and verifiable data.

Q3. Rank Nigerian Banks as of 2024.

Banks are important stakeholders in Nigeria’s financial system; they represent considerable economic
power and act as stability pillars.

Nigeria’s financial system has experienced significant expansion, with 26 commercial banks with
combined asset values close to N150 trillion. By 2023, 64% of the country’s population will have access
to formal banking.

One factor to take into account when choosing a bank is its size, as this has an impact on the services it
offers and the locations it can be found in.

Here is a list of the top 10 biggest banks in Nigeria based on total assets and branch count, based on this
justification.
1. Access Bank: 32.57 trillion

The largest bank in Nigeria in terms of assets is Access Bank Plc, with around N32.57 trillion in assets.
There are roughly 737 branches of the bank, of which 554 are located in Nigeria alone. The remaining
183 locations of Access Bank are spread among the 20 nations in which the bank has subsidiaries.

The bank’s other African businesses combined have assets of N5.76 trillion, while its Nigerian subsidiary
has N22.72 trillion in total assets.

2. United Bank for Africa: 25.37 trillion

With a total asset value of N25.37 trillion, United Bank for Africa (UBA) Plc is the second-largest bank in
Nigeria. The bank is headquartered in 24 countries and has over 1000 touchpoints; yet, it maintains 451
branches spread throughout the 36 states and the Federal Capital Territory of Nigeria.

UBA has a staff strength of over 10,000, with over 5,900 in UBA Nigeria.

3. Zenith Bank: 24.28 trillion

Jim Ovia launched Zenith Bank, the largest profit-generating bank in Nigeria, in 1990. With N24.28
trillion in total assets, the bank is the third largest in Nigeria. Of those assets, N16.81 trillion comes from
Zenith Bank Nigeria, the bank’s Nigerian subsidiary.

397 of the bank’s 447 branches are owned and operated by Zenith Bank Nigeria. In all, the bank’s
subsidiaries serve nearly 33 million customers.

4. First Bank of Nigeria: 16.90 trillion

First Bank of Nigeria, the leading financial institution in Nigeria and a member of the FBN Holding Group,
has N16.9 trillion in assets. The bank operates 86 branches among its foreign subsidiaries, in addition to
595 branches and 144 Quick Service Points (QSPs) in Nigeria.

First Bank has over 41 million customers, positioning the bank as the Nigerian bank with the highest
number of customers.

5. Ecobank Nigeria: 10.37 trillion

Ecobank Nigeria is a subsidiary of Ecobank Transnational Incorporated (ETI) Plc. The bank has around
273 branches and 541 ATMs located throughout Nigeria, with a total asset value of N10.37 trillion.

In 1985, Ecobank was established in Togo, with its initial investors being Federation of West African
Chamber of Commerce (FWACC) members. In Togo, Nigeria, Ghana, Cote d’Ivoire, and Benin, the bank
was founded during its early years, from 1988 to 1990. Since then, 32 sub-Saharan nations have
launched Ecobank branches.

6. GT Bank: 8.79 trillion

There are currently 237 bank branches and 33 eBranches among GT Bank Nigeria’s about 270 locations.

7. Fidelity Bank: 6.23 trillion

Despite having a merchant banking licence when it was founded in 1988, Fidelity Bank Plc changed its
status to commercial bank in 1999. With a total asset value of N6.23 trillion, the bank is now ranked as
the seventh largest bank in Nigeria.

Currently, Fidelity Bank has one branch in the UK and 249 branches in Nigeria.

8. Stanbic IBTC Bank: 4.97 trillion

The total asset value of Stanbic IBTC Bank Limited, a division of Stanbic IBTC Holdings, a Standard Bank
Group member, is N4.974 trillion. In Nigeria, the bank has roughly 130 branches.

Throughout Nigeria, Stanbic IBTC Bank, which is renowned for its technological advancements, has 814
ATMs. It is held entirely by Stanbic IBTC Holdings Plc, a subsidiary of Standard Bank Group, which is
67.55% controlled by Stanbic Africa Holdings Limited.

9. First City Monument Bank: 3.78 trillion

The FCMB Group subsidiary First City Monument Bank Limited (FCMB) is the ninth-biggest bank in
Nigeria. The bank has branches in 203 locations throughout the 36 states, with a total asset size of N3.78
trillion.

FCMB, which was established in 1982 by Otunba Subomi Balogun, has about 8.7 million customers in
Nigeria.

10. Union Bank: 3.65 trillion

Established in 1917, Union Bank of Nigeria, the second oldest bank in Nigeria, has a total asset size of
about N3.65 trillion. The bank, which has about 258 branches and cash centres across Nigeria, has an
active customer base of about 7.8 million customers.

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