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DatabankOctober 15 2021

Double whammy hurts Nigerian banks’ ROE

Access Bank, the country’s largest lender by total assets, saw ROE fall from 16% in 2019 to 14.1% in 2020.
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Return on equity (ROE) at three of the top four Nigerian banks dipped last year amid the oil price slump and the fallout from the pandemic.

The economy has contracted a second time in the past five years in 2020 and the World Bank forecasts gross domestic product (GDP) to rebound a modest 1.9% in 2021. Nigerian banks’ earnings have been hampered by volatility in the oil price, as well as declining foreign exchange reserves.

Access Bank, the largest bank by assets, saw ROE fall from 16.0% in 2019 to 14.1% in 2020, while Zenith Bank, the largest lender by Tier 1 capital, saw ROE fall from 22.1% in 2019 to 20.6% last year, according to The Banker Database.

Meanwhile, First Bank of Nigeria, the fourth largest by assets, saw ROE dip from 11.1% in 2019 to 9.9% in 2020.

However, bucking the trend was United Bank for Africa, which has subsidiaries in 20 African countries; its ROE improved slightly, rising from 14.9% in 2019 to 15.7% in 2020.

All four banks saw rises in ROE between 2017 and 2018, on the back of rebounding GDP growth at that time.

Trends identified using The Banker Database, an online database providing comprehensive financial data and insight for 4000 of the world's leading banks in 190 countries. Contact us. 

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