The Nigerian banking industry’s net earnings grew remarkably by 75 percent in 2012. Pre-tax profits increased almost ten-folds to N539 billion in same period. For the first time since 2009, no bank posted a pre-tax loss. As a result, the Industry‘s pre-tax return on assets and equity improved to 2.5 percent and 21 percent respectively, compared with the 0.3 percent and 3.4 percent recorded in 2011.

Based on Agusto & Company’s assessments, tier I banks consisting Zenith Bank, First Bank, UBA, GTBank Plc and Access Bank Plc are the most profitable banks in the Nigerian banking Industry, as all tier I banks achieved pre-tax ROE in excess of 20 percent in 2012.

Prior to the crisis, the banking industry recorded pretax return on average assets of 3 percent while pretax return on average equity stood at 23 percent by yearend 2007.

Industry non-performing loans declined on the back of sale of delinquent loans to AMCON, write-offs, aggressive recoveries by the banks as well as cautious approach to loan growth by most banks.

The lowest non-performing loans to total loans ratio was recorded by Citibank Nigeria Limited, while Enterprise Bank recorded the highest NPL ratio of 26.1 percent.

Agusto & Co believes the estimate GDP growth rate of 6.75 percent will positively impact the Banking Industry.

“We anticipate that in the short to medium term as banks seek high yielding assets to compensate the loss of ancillary income and declining yields on government securities, non-performing loans will start to creep up. Nevertheless, we do not anticipate it will reach a double digit mark save for a systemic or political crisis,” Augusto said.



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