…loans and advances hit N35trn
…personnel expenses surge by 85%
Amid a profit windfall occasioned by the humongous gains realised from forex, six deposit money banks in Nigeria have paid a total of N537.45 billion as tax to the Federal Government in the first three quarters of 2024. Their income during the period was further boosted by the hawkish stance of the Central Bank of Nigeria (CBN) which raised the benchmark interest rate, the Monetary Policy Rate (MPR), to 27.25 percent in a bid to taper inflation.
The Nigerian Observer’s analysis of the banks’ nine months unaudited financial results for the period ended 30 September 2024 showed that the amount paid as tax represented an increase of 119 percent when compared to N245.39 billion the same banks paid as tax in the corresponding period of 2023.
The banks under coverage include the tier-one giants, Zenith Bank, First Bank, United Bank for Africa (UBA) and Guaranty Trust Holdings. The other tier-two banks are Fidelity Bank and Wema Bank.
The surge in banks’ tax expenses came on the heels of the proposed windfall tax through which the Federal Government seeks to tax bank’s foreign exchange gains to the tune of about 50 percent. The floating of the naira, which caused its value to depreciate from about N466 as of June 2023 to about N1600 as of September bolstered banks’ earnings, especially those that have FX assets.
“It appears the FGN has looked to other countries that have also imposed a windfall tax i.e., a special tax imposed on specific industries where macroeconomic events have allowed players in the industry to recognize greater than average profits,” Deloitte, one of the leading accounting and consulting firms in Nigeria, said in an assessment note of the policy.
“For instance, in May 2022, the United Kingdom introduced a windfall tax of 25% on energy profits. This was further increased to 35% in January 2023[1]. Also, on 8 August 2023, Italy imposed a windfall tax on profits earned by banks from high interest rates to assist mortgage holders,” Deloitte added.
Zenith Bank paid the highest amount of N175.56 billion as tax in Q3 2024, an increase of 147.8 percent when compared with N70.86 billion the same bank paid during the corresponding period of 2023. Deeper dive analysis of its third quarter results showed that the bulk of the tax paid was corporate tax, N105 billion, followed by tertiary education tax, N29 billion. Others include information technology tax, N8.3 billion, and national fiscal stabilisation levy, N5.7 billion, among others.
Guaranty Trust Holdings (GTCo) paid the second highest tax of N134.46 billion in the nine-month period ended September 2024. This amounted to an increase of 104.4 percent when compared with N65.79 billion paid in the same period in 2023. The bulk of this payment was for company income tax.
FBN Holdings, the parent company of First Bank of Nigeria Limited, paid N84.58 billion as tax, an increase of 150 percent when compared with N33.83 billion paid as tax during the same period in 2023.
UBA paid N78.17 billion as tax, representing an increase of 48.1 percent when juxtaposed with N52.80 billion paid as of September 2023.
Fidelity Bank paid N56.81 billion just as Wema Bank paid N7.88 billion as of September 2024, amounting to an increase of 195.3 percent and 174 percent respectively when compared with N19.24 billion and N2.88 billion the two banks made as of September 2023.
All the six banks cumulatively realised N3.24 trillion as profit after tax as of September 2024, an increase of 103.1 percent when compared with N1.59 trillion realised as of September 2023.
GTCo made the most profit of N1.09 trillion, which is higher by 195.3 percent than the N367.42 billion realised as of September 2023. Zenith Bank realised N827.28 billion in Q3 2024 as profit after tax, an increase of 90.5 percent over N434.17 billion profit made in similar period in 2023.
First Bank realised N526.28 billion profit in Q3 2024 as against N230.05 billion in Q3 2023; UBA made N525.31 in Q3 2024 as against N449.30 billion as of September 2023; Fidelity Bank made N224.60 billion profit as against N91.75 billion as of September 2023 while Wema Bank made N52.74 billion profit compared with N19.24 billion in Q3 2023.
Personnel expenses of the six banks under coverage rose by 84.6 percent from N397.68 billion in Q3 2023 to N734.09 billion as of Q3 2024. The highest increase in personnel expenses was at UBA whose employees received N225.42 billion as compensation compared with N111.11 billion in Q3 2023.
GTCo employees received N71.53 billion as against N37.58 billion in Q3 2023. Zenith Bank paid its employees N150.67 billion in Q3 2024 as against N88.43 billion as of September 2023.
Fidelity Bank paid its employees N43.60 billion as against N30.31 billion in Q3 2023 while Wema Bank paid its employees N32.47 billion compared with N19.04 billion in the corresponding period of 2023.
Loans and advances administered by the six banks increased by 46.2 percent to N34.72 trillion as of September 2024 as against N23.74 trillion as of September 2023. This is against the deposits mobilised by the same banks which rose to N80.32 trillion compared with N52.22 trillion in the corresponding period of 2023.
