Six Nigerian banks report N3trn profit in 2024

In 2024, six banks in the country reported a profit after tax of N3.41 trillion, an increase from the N2.1 trillion achieved in the 2023 financial year. This growth occurred despite various complaints regarding transactions and services, customer dissatisfaction, and the prevailing economic difficulties in the country.

The reported profit reflects a significant rise of 62.38 percent compared to the previous year's figures. A correspondent from the News Agency of Nigeria, who reviewed the 2024 audited financial statements published on the Nigerian Exchange Group (NGX) platform, noted that all the banks experienced an uptick in their gross earnings.

Additionally, their profit before tax climbed to N4.1 trillion in 2024, marking a 42.7 percent increase from the N9.61 billion recorded in the same period of 2023. The banks under analysis include Zenith Bank Plc, Guaranty Trust Holding Company Plc, United Bank for Africa Plc, Fidelity Bank Plc, Stanbic IBTC Holdings Plc, and Wema Bank Plc.

The banks credited their profits to equity holders, non-controlling interests, and earnings per share, both basic and diluted. GTCO declared a final dividend of N7.03 per share, raising the total dividend for the 2024 financial year to N8.03 per share, compared to N3.20 per share distributed in 2023.

Zenith Bank proposed a final dividend of N4.00 per share, in addition to an interim dividend of N1.00 per share, totaling N5.00 per share. UBA announced a total dividend of N5.00 per share, while Fidelity Bank proposed a final dividend of N2.10 per ordinary share, and Stanbic IBTC suggested a final dividend of N3.00, up from N2.20 in 2023.

Moreover, the banks' contributions to charitable and non-political organizations increased to N969 billion for the 2024 fiscal year, a notable rise from their N2.6 billion contribution in 2023. Nonetheless, there remain unresolved customer complaints reported by the banks.

GTCO reported receiving 941,241 complaints, of which 935,081 were resolved, resulting in 7,998 complaints remaining unresolved. In contrast, UBA faced 3,210,708 complaints and successfully resolved 2,090,122, leaving 1,120,907 unresolved for the fiscal year 2024.

Zenith Bank recorded a total of 203,787 complaints, including those carried over, and resolved 202,384, which left 1,403 unresolved complaints.

Wema Bank received 783,461 complaints and resolved 780,063, resulting in 11,372 unresolved complaints, including those carried forward.

In response to these challenges, financial experts have called on the Central Bank of Nigeria to enhance its monitoring and supervisory functions to prevent banks from overcharging their customers.

Professor Uche Uwaleke, President of the Capital Market Academics of Nigeria, informed NAN that the Central Bank of Nigeria’s Monetary Policy Committee (MPC) has allowed several banks to boost their interest income.

Uwaleke pointed out that this increase in interest income has led to higher lending rates without a corresponding rise in savings rates.

He also highlighted other contributing factors to the growth in banks' profits, such as the depreciation of the Naira, which has benefited banks holding foreign-denominated assets.

Additionally, he mentioned the issue of banking sector recapitalization, which allows banks to raise funds from the capital market to invest in Information Technology infrastructure.

“It is indeed true that many banks, particularly tier 1 banks, are reporting substantial profits despite the challenging economic conditions in the country.

“The explanation for this is straightforward. The year 2024 was marked by a high-interest rate environment.

“While the economy continues to experience sluggish growth, this is evident across nearly all sectors, especially the risk-prone sectors such as manufacturing and agriculture, which did not achieve significant growth in 2024,” he stated.

However, he acknowledged that the services sector has driven growth, noting that the banking sector falls within this category.

How can we effectively address the disconnect between the financial sector and the risk sector, while also ensuring that bank customers become more aware of the financial health of their banks?

The Central Bank of Nigeria (CBN) must closely monitor and regulate banks to prevent them from imposing excessive charges on customers.

While the CBN has established recommended bank fees, it is crucial for the regulator to ensure that customers are not adversely affected by the inefficiencies observed in certain banks, he stated.

Uwaleke emphasized that the CBN should encourage banks to raise savings rates in alignment with lending rates.

He noted that it is the CBN's responsibility to ensure that when the policy rate is increased, as seen in 2024, banks promptly adjust their lending rates, while savings rates often lag behind.

Therefore, the CBN should guide banks to maintain a reasonable margin between savings and lending rates, ensuring that it does not exceed a specific threshold.

It is essential that savings rates rise in conjunction with lending rates whenever policy rates are adjusted, he proposed.

The expert highlighted that customers are vital stakeholders in the banking industry, underscoring the necessity for the CBN to safeguard their interests.

Mr. Okechukwu Unegbu, a former President of the Chartered Institute of Bankers of Nigeria, remarked that banks frequently impose various charges that ultimately burden their customers.

Unegbu lamented that many customers hesitate to contest what they perceive as 'illegal' charges from their banks.

"Banks impose a range of fees, including some that may be unlawful, and when customers voice their concerns, they often receive no response, believing the amounts involved are insignificant," he explained.

"Customers tend to be passive; they need to awaken and consider legal action against banks for these unlawful charges," he added.

A customer might wonder, for instance, if it is worth going to court over a mere N50 charge.

The issue at hand is not merely the N50 charge; rather, it is the fundamental principle behind it, which banks are exploiting as a convenient justification to unjustly take advantage of customers' hard-earned money.

"If you impose a N50 fee on 1,000 customers, the total amount becomes significant," he remarked.

Unegbu urged the Bank Customers Association of Nigeria (BCAN) to fulfill their duty by holding banks accountable for their perceived unfair practices towards customers.

Several bank customers who spoke to NAN reported that their complaints regarding transaction failures and unauthorized debits remain unresolved by their banks.

Mrs. Catherine Itoha, a customer of GTCO, stated that the bank has not yet refunded over N20,000 that was debited from her account due to multiple failed Point of Sale (PoS) transactions over the past 11 months.

Itoha called on banks and their employees to embrace fair practices in their dealings with customers.

"Customers are the foundation of banks' existence, and we deserve equitable treatment.

"GTB has debited me for approximately four different transactions, yet none of these amounts have been refunded to date.

"I have visited the bank, completed the necessary forms, and personally communicated with their staff, but the issue remains unresolved since last year," she explained.

Mr. Augustine Ode, a customer of Zenith Bank, urged the Central Bank of Nigeria (CBN) to intervene and address the excesses of certain banks that are allegedly defrauding customers while reporting substantial profits.