This is a big response. The Central Bank of Nigeria wants banks to have a paid-up capital of N500 billion. But here, one bank made a profit after tax of N677 billion in one year.

Good People, there is something fundamentally intriguing about Nigeria. Yes, it is so wide apart that you may not know you are in the same country. The country of Zenith Bank which closed on N677 billion and one of  Unity Bank which declared billions in losses.

I read one book – Acres of Diamonds – and I realized that the diamonds I am looking for may be right before me. Yes, we often dream of fortunes to be made elsewhere even though opportunities may be around the corner. I am not here to debate and against bank profits (I have written about them in the past), I am here to tell everyone that promises remain for the future.

May Zenith Bank’s alpha give you energy to keep pushing…

Zenith Bank Declares N676.91bn Profit After Tax (PAT) for FY 2023, GTBank’s GTCO N539.655bn

Zenith Bank Plc, one of Nigeria’s premier financial institutions, has made history with its exceptional financial performance for the fiscal year 2023. The bank recently unveiled its audited accounts, revealing gross earnings of a staggering N2.13 trillion.

This remarkable figure represents a remarkable growth of 125.4% year-on-year and stands as the highest gross earnings ever reported in the company’s storied history.

Key Highlights of FY 2023 vs FY 2022:

Gross Earnings: N2.13 trillion, +125.4% YoY
Net Interest Income: N736.18 billion, +100.8% YoY
Net Income on Fees and Commission: N109.31 billion, -17.7% YoY
Trading Gains: N566.97 billion, +166.6% YoY
Profit Before Tax: N795.96 billion, +179.6% YoY
Profit After Tax: N676.91 billion, +202.3% YoY
Earnings per share: N21.55, +201.8% YoY
Loans and Advances: N6.57 trillion, +63.4% YoY
Total Assets: N20.37 trillion, +65.8% YoY
Total Shareholders’ Equity: N2.32 trillion, +68.5% YoY
Retained Earnings: N1,179,390 vs N625,005
Proposed Dividends: N3.50 per share (Total for the year N4 per share).

Zenith Bank’s extraordinary performance is underscored by its significant surge in interest income, which amounted to a staggering N1.1 trillion. However, the bank also made a substantial provision of about N409.6 billion, which reduced its Net Interest Income after provisioning to N326.5 billion. This provision may be linked to challenges in utilizing retained earnings for dividend payments, especially following the central bank’s decision to exclude retained earnings from its calculation of a bank’s share capital.

Additionally, Zenith Bank greatly benefited from foreign exchange rate dynamics, accruing an estimated N228.9 billion from forex revaluation gains. The bank also reported impressive trading gains of N566.9 billion. Interest income from treasury bills in 2023 skyrocketed to N179.0 billion, marking a remarkable 310.4% growth from the previous year.

Moreover, interest income from government and other bonds reached N187.4 billion in 2023. Notably, electronic product fees emerged as a major contributor to fees and commission income, amounting to N51.8 billion, representing a 13.3% increase from the previous year.

Zenith Bank’s capital adequacy ratio climbed to 22% in 2023, up from 20% in the preceding year, further solidifying its financial strength and stability in the market.

Guaranty Trust Holding Achieves Remarkable Growth in FY 2023

Also, Guaranty Trust Holding made significant strides in the fiscal year 2023, as evidenced by its impressive financial performance. The holding company reported a gross earnings figure of N1.187 trillion, representing a remarkable increase of 120.03% from the previous year’s earnings of N539.235 billion.

A cursory review of the financial statements reveals that interest income emerged as a substantial contributor, constituting 46.42% of the gross earnings. This underscores the importance of interest income in driving the company’s revenue generation efforts.

Furthermore, Guaranty Trust Holding reported a robust profit before tax of N609.308 billion for the year ended December 31, 2023. In line with its commitment to shareholder value, the company proposed a final dividend of N2.70 per share.

A notable shift in the composition of gross earnings occurred compared to the previous year, with foreign exchange (FX) revaluation gains playing a more significant role. In FY 2023, FX revaluation gains contributed 37.24% to the gross earnings, reflecting a notable increase from the previous year’s contribution of 10.74%.

Key highlights of FY 2023 compared to FY 2022 include:

Gross earnings: N1.187 trillion, +120.03% YoY
Interest Income: N550.755 billion, +69.25% YoY
Interest Expense: N114.059 billion, +72.56% YoY
Net interest income: N436.697 billion, +68.41% YoY
Loan impairment charges: N102.953 billion, +758.91% YoY
Net fees and commission income: N109.428 billion, +18.95% YoY
FX revaluation gain: N441.791 billion, +662.54% YoY
Other operating expenses: N122.429 billion, +31.56% YoY
Profit for the period: N539.655 billion, +218.99% YoY
Earnings per share: N19.05, +220.17% YoY
Loans and advances to customers: N2.480 trillion, +31.52% YoY
Cash and bank balances: N2.310 trillion, +42.47% YoY
Total Assets: N9.691 trillion, +50.33% YoY
Customers’ deposits: N7.411 trillion, +65.23% YoY
Share capital & share premium: N138.187 billion
Retained earnings: N580.024 billion, +169.96% YoY

The commentary accompanying the financial results indicates that interest income remains a major driver of gross earnings, primarily fueled by growth in loans and advances.

However, the company has strategically reduced its reliance on loans and advances by increasing exposure to investment in debt securities, thereby diversifying its risk profile and enhancing the stability of its balance sheet.

Furthermore, Guaranty Trust Holding’s conservative lending policy likely contributed to the moderation of its loan provision to N103 billion. This prudent approach underscores the company’s commitment to managing risk effectively while maximizing shareholder value.

In the past, Nigerians used to be for the US Democratic Party. But recently, I have noticed that on WhatsApp, and many ecosystems, most Nigerians are sounding more Republican and Trumpian. That is fine; it is a free world. But allow me to share some contexts here.

I’m a Democrat. While I am against some of their social policies, it’s a party Nigeria could emulate. There’s a reason 80% of America’s largest cities are run by Democrats . There is a reason 80% of America’s top ranked universities are in Democratic cities. There’s a reason more democratic states have net tax positive to the US government Treasury than Republican states (they send to the central purse than they receive). 

Even the “crazy” Democratic California is the most innovative state in the world. It has the world’s finest university system. It has invented more technologies than any country, and without California, the world may be out of sync in decades. 

Let us discuss American parties on the facts because if America loses Democrats, the ‘Igwebuike’ [together we move] spirit will go. This is not to tell you to switch. I just think people should not discard Democrats because of the woke and crazy social things they create and support. If you look at their economic results, Nigerian leaders could learn something from them.

Yes, they tax, and use that money to build public platforms which benefit everyone. Those great universities, public transportation systems, etc actually help many to come along.

Indeed, what makes Massachusetts better than Mississippi? There are many things even though many will not be happy with those taxes. You pay more real estate tax, etc but they have better schools. Mississippi may not tax that much but the schools are not that great. You decide which is better!

In the past, Nigerians used to be for the US Democratic Party. But recently, I have noticed that on WhatsApp, and many ecosystems, most Nigerians are sounding more Republican and Trumpian. That is fine; it is a free world. But allow me to share some contexts here.

I'm a… pic.twitter.com/rCMiTcPs2R

— Ndubuisi Ekekwe (@ndekekwe) April 9, 2024

How much is that company worth? Yes, how do you know how much you should sell that startup? Oh yes, how do you model how much you should pay for that company? Join us today as we discuss “Financial Modeling and Business Valuation” at Africa’s largest business program, Tekedia Mini-MBA.

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