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Best commercial banks in Nigeria for Q3 2022

FCMB, First Bank, and Fidelity Bank led the list of best-performing commercial banks in the third quarter of 2022.

This is according to an analysis of the financial and equity performances of publicly quoted banks, carried out by Nairalytics, the research arm of Nairametrics.

The analysis revealed that the thirteen banks raked in a sum of N298.84 billion as post-tax profit between July and September 2022, representing an increase of 29.9% compared to N228.54 billion recorded in the corresponding period of 2021.

  • The commercial banks remained resilient despite economic headwinds, which saw the nation’s aggregate GDP growth slowed to 2.25% in Q3 2022 from 3.54% recorded in the previous quarter and 4.03% in the corresponding period of 2021.
  • Also, banks’ loans to customers grew by 5.5% between June and September 2022 to stand at N23.76 trillion, representing a net new loan of N1.23 trillion in three months. However, this showed a slightly slower growth than the 6.81% increase recorded in the comparable period of 2021.

Financial highlights for Q3 2022

  • Customer deposits increased by 5% in the period under review to stand at N43.68 trillion as of September 2022 from N41.61 trillion as of June 2022.
  • Only four out of the thirteen banks recorded a positive growth in the share price in Q3 2022 at the local equities market.
  • The thirteen banks recorded an average cost-to-income ratio of 64.96% in the review period, compared to 69.11% recorded in the corresponding period of 2021, indicating more income as opposed to expenses.
  • The banks printed an average return on average equity (ROAE) of 15.25% (annualised) in Q3 2022, in contrast to the 13.4% recorded in the previous year.

Meanwhile, despite improved financial performance in the third quarter of the year, data from the National Bureau of Statistics (NBS) shows slow growth compared to previous periods. According to the NBS, the Nigerian banking sector (sector GDP) slowed from 20.06% and 25.5% growth recorded in Q2 2022 and Q3 2021 respectively to 12.03% in real terms in the period under review.

This is the slowest quarterly growth rate since Q1 2021 when the economy was still recovering from the impact of the covid-19 pandemic. However, the Nigerian banking sector is a vital sector of the Nigerian economy, which sets the tone for many other sectors, vested with the responsibility of ensuring credit moves from sectors with excess capital/cash to others with a deficit in a bid to spur aggregate real economic growth.

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In light of this, Nairametrics presents a ranking of the best commercial banks in the third quarter of 2022, using metrics from their publicly released financial statements and performance at the local exchange. You can read previous editions for H1 2022 and Q1 2022.

The key metrics considered in these analyses are total asset growth, loan book growth, profit growth, cost–to–income ratio, customer deposit growth, return on average equity and share price appreciation.

Ecobank was not included in this analysis due to most of its operations being outside the shores of Nigeria.

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Leading banks by total asset growth

The thirteen banks under consideration grew their total assets by 4% from N63.59 trillion recorded as of June 2022 to N66.13 trillion as of the end of September 2022, representing an increase of N2.54 trillion in three months.

Access, Zenith, and First Bank recorded the highest asset value as of the period under review, however, the position changed in terms of growth rate. Below are the leading banks by total assets growth between June and September 2022.

  • First position – Zenith Bank (+12.1%)
  • Second position – FCMB (+10.6%)
  • Third position – Union Bank (+4.8%)
  • Fourth position – Jaiz Bank (+3.8%)
  • Fifth position – UBA (+3.6%)

Leading banks by customer deposits growth

Customer deposits to the thirteen banks increased by 5% in the third quarter of 2022 to stand at N43.68 trillion from N41.61 trillion recorded as of June 2022.

Access, Zenith, and UBA recorded the highest customer deposits as of September 2022. Meanwhile, below are the leading banks by growth in customer deposits in Q3 2022.

  • First position – Zenith Bank (+12.4%)
  • Second position – FCMB (+11%)
  • Third position – Jaiz Bank (+6.9%)
  • Fourth position – Union Bank (+5.3%)
  • Fifth position – First Bank (+4.7%)

Leading Banks by loan book growth

The loan books of the twelve banks (Jaiz Bank excluded) that reported their customer loans grew by 5.5% to stand at N23.76 trillion as of September 2022 from N22.53 trillion recorded as of June 2022.

A bank loan is an important metric used in assessing the performance of banks. Notably, loans allow for growth in the overall money supply in an economy and open up competition by lending to new businesses.

The interest and fees from the loans also form a major part of banks’ earnings. As of the period under review, Access Bank boasts the largest loan book at N4.62 trillion, followed by Zenith Bank and First Bank with N3.88 trillion and N3.6 trillion respectively.

Meanwhile, in terms of loan book growth, below are the top banks for Q3 2022;

  • First position – Zenith Bank (+10.9%)
  • Second position – Union Bank (+10.8%)
  • Third position – UBA (+10.8%)
  • Fourth position – Stanbic IBTC Bank (+6.7%)
  • Fifth position – First Bank (+6.5%)

Leading banks by profit after tax (PAT) growth

The thirteen banks posted a profit after tax of N296.84 billion in Q3 2022, an increase of 29.9% from N228.54 billion recorded in the corresponding period of 2021.

In terms of profit after tax, Zenith, GTCo, and Access Bank led the list of banks with the highest profit, meanwhile, below is the ranking in terms of profit growth.

  • First position – First Bank (+1k%)
  • Second position – Fidelity Bank (+61.7%)
  • Third position – Sterling Bank (+42.7%)
  • Fourth position – Stanbic IBTC (+40.8%)
  • Fifth position – Access Bank (+37.1%)

Leading banks by the cost-to-income ratio

The cost-to-income ratio is a key financial metric, which shows a company’s costs as a proportion of its income. It helps to give investors a clear view of how efficiently a bank is being run. Specifically, it shows how much input the bank requires to generate N1 of output.

Notably, the lower this ratio, the more profitable, productive, and competitive the bank will be. Here are the banks with the highest decline in their cost-to-income ratio:

  • First position – First Bank (-31.6%)
  • Second position – FCMB (-16.3%)
  • Third position – Stanbic IBTC (-5%)
  • Fourth position – Zenith Bank (-4.9%)
  • Fifth position – Access Bank (-3.2%)

Leading banks by return on average equity (ROAE)

The return on equity is also an important metric that shows the percentage of profit made on every N1 of the shareholders’ fund. It is used to measure the performance and efficiency of the banks.

This metric will show how well banks have maximized any increase in shareholders’ wealth. Below are the top banks with the highest increase in their ROAE year-on-year.

  • First position – First Bank (+14.19%)
  • Second position – Fidelity Bank (+4.75%)
  • Third position – FCMB (+3.81%)
  • Fourth position – Sterling Bank (+3.72%)
  • Fifth position – Zenith Bank (+0.54%)

Top banks by share appreciation

The Nigerian equities market dipped by 5.4% in the third quarter of 2022, losing N1.48 trillion in market capitalization, while the listed banks suffered significant sell pressure. Out of the thirteen banks listed on the Nigerian Exchange, only four of them recorded share price appreciation in the review period.

  • First position – Wema Bank (+8.2%)
  • Second position – Fidelity Bank (+7.6%)
  • Third position – Sterling Bank (+2.0%)
  • Fourth position – Union Bank (+0.8%)

Final Scorecard

The final ranking allocated equal weights to each of the metrics considered in this analysis, which positions FCMB as the best-performing bank in Q3 2022 in comparison to the corresponding period of last year with a weighted average score of 4.15 points, having ranked second in three categories, third in one and fourth in one category.

  • First Bank and Fidelity Bank followed with 4.45 points and 4.75 points respectively.

How do we determine the best performers?

  • Nairametrics compiles the financial results of the thirteen banks specifically for the third quarter of 2022. The percentage change between Q3 2022 and the corresponding period of 2021.
  • The analysis applied a weight of 5% for asset growth, 15% for profit growth, 15% for loan book growth, 15% for customer deposit growth, 20% for change in return on average equity, 10% for changes in cost-to-income ratio, and 20% for share price appreciation.

 

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