The Paradox of Bank Earnings in Nigeria [Video]

The Paradox of Bank Earnings in Nigeria [Video]

The Paradox of Bank Earnings in Nigeria states that the market performance of the banking sector is uncorrelated with improving revenue and profitability. Using GTBank as an example, the bank has seen erosion of market cap in a period where it has delivered sustained improvements on revenue and profitability.  What do Nigerian investors want? And what is the reason behind this market dislocation? I this video, I posit some reasons.

Potential areas:

  • Economic Growth
  • Extraction of fees
  • Confidence in markets
  • Relative Performance
  • Fintechs & Telcos
  • Inefficiency in markets

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2 thoughts on “The Paradox of Bank Earnings in Nigeria [Video]

  1. Not sure many people see banks as partners in progress, people use banks simply because they don’t have options; it is not a deliberate or happy choice.

    Even when the economy is hibernating, banks here can still declare huge profits, not because they are innovative or offer any special value, but because the system was structured to favour them; making it possible to rake in profits without sweating.

    You can have millions of naira in your savings account for months, but as long as you perform three transactions per month, you are not going to earn anything there. Interbank transfers that shouldn’t cost more than N5, they charge you N50, and by the time you do 20 in one day, you have over a thousand naira. Add that to the ones they collude with government to extort, you see that revenue keeps coming; it’s like collecting royalties. Investors don’t see that as credible investment, no enthusiasm, no surprises.

    There is no confidence in that industry, people are just grudgingly using their channels, while they milk them to standstill.

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