In 2024, Nigeria’s leading banks rode a wave of macroeconomic volatility to record-breaking profits. Collectively, nine top banks—Access Holdings, FCMB, Fidelity, First Holdco, GTCO, Stanbic IBTC, UBA, Wema Bank, and Zenith—declared a staggering N4.786 trillion in profit after tax, a 53.34% rise from the N3.121 trillion posted in 2023.
But beyond the surge in bottom-line figures lies a more compelling revelation: these banks generated N8.871 trillion in total wealth, according to their Value-Added Statements (VAS)—a 66.3% increase from N5.335 trillion the previous year. This wealth, though created by private institutions, was more generously shared with the government than with the banks’ shareholders.
The VAS, often overlooked in financial analyses, breaks down how generated wealth is distributed among key stakeholders—governments, employees, capital providers, shareholders, and the banks themselves through retained earnings. What it shows in 2024 is a consistent trend across institutions: governments, particularly through taxes, emerged as the largest external beneficiaries.
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Government Bags the Lion’s Share in Taxes
While banks paid out a record N951.4 billion to shareholders, representing an 87% increase from 2023, the federal and state governments collectively walked away with an even larger share—N1.166 trillion in taxes. This represents a 111.4% jump from the previous year, making public coffers the biggest winner of the banking boom.
Zenith Bank, Nigeria’s most profitable bank in 2024 with a profit after tax of N1.032 trillion, paid the government N294 billion in taxes and levies—147% more than the previous year. Shareholders, by comparison, received N196.676 billion. The bank retained N1.085 trillion, which includes statutory reserves and allocations for future use.
GTCO followed closely, reporting a N1.018 trillion profit and generating N1.410 trillion in value. Government receipts from GTCO hit N248.443 billion—a 257% increase. Though shareholders were paid N236.332 billion, it was still short of what the state received.
Access Holdings, which generated the highest value-added of all at N1.622 trillion, paid N224.802 billion to the government and N261 billion to finance providers. Shareholders got N125.299 billion, highlighting a lopsided distribution.
First Holdco, with N1.593 trillion in generated value, saw government taxes reach N132.977 billion, while shareholders took home a mere N25.127 billion—five times less than the state’s cut.
Fidelity Bank’s case was even starker. It paid N95.454 billion in taxes—an astronomical leap from the N4.170 billion paid in 2023. Yet shareholder dividends were N89.965 billion, slightly less than the government’s haul despite a 231% year-on-year jump.
Stanbic IBTC paid N78.485 billion in taxes from a total of N408.586 billion value-added, while employees received N86.681 billion—more than what the government or shareholders earned. Shareholders got N64.758 billion, the lowest of the three.
Even FCMB, which experienced a 21% decline in profit after tax, paid more to the government (N38.558 billion) than it did to shareholders (N21.783 billion), reinforcing the broader pattern.
UBA and Wema Bank were rare exceptions. UBA paid N37.158 billion to the government and N170.997 billion to shareholders, while Wema’s dividend payout (N21.430 billion) outpaced the N16.235 billion in taxes. But such reversals were the exception rather than the norm.
A Shift in Value Distribution
The results underscore a significant shift in value distribution—one where the Nigerian government, through its tax mechanisms, has become the largest external recipient of private banking wealth. In total, banks retained N5.467 trillion for reinvestment and expansion, reflecting prudence amid economic uncertainty. However, the amount received by the government far exceeded the sums returned to the very investors who took the risk in the first place.
This growing share of national revenue sourced from the financial sector also underscores a broader economic reality: Nigeria’s fiscal reliance on private capital may be deepening, particularly as oil revenues remain underwhelming and foreign investments continue to waver.
Taxation of the banking sector is, by all indications, filling some of the gaps. But the scale and pace of tax growth, more than doubling in some institutions, raises questions about the sustainability of this model, and whether governments are leaning too heavily on a handful of highly capitalized corporations to fund bloated budgets.
For context, the government’s N1.166 trillion tax taken from just nine banks is not far off from key capital expenditures in the national budget. The same year, capital allocations to sectors such as education, health, and public infrastructure combined struggled to meet similar figures. This disproportion reinforces the narrative of private capital being tapped to keep the state afloat.
But it also exposes a risk. If macroeconomic volatility intensifies, and these profit levels begin to taper, especially amid tighter monetary policies or currency instability, the state’s over-reliance on bank taxes could pose a fiscal risk.