Reflecting the impact of the Coronavirus pandemic and devaluation of the Naira, financial performance, banks’ losses to bad loans shot up by 99 percent in first quarter of 2020 (Q1’2020), which caused profit growth rate to fall by 29 percent.

Analysis of the financial results of nine out of top ten banks for the first quarter ending March 2020 showed 19.7 percent year-on-year, YoY, increase in profit before tax, PBT, to N263.51 billion in Q1’20 from N243.8 billion recorded in Q1’19. This increase, however, represents 7.9 percent decline in the profit growth rate when compared with the 27.6 percent, YoY increase recorded in Q1’19, from N216.2 billion in Q1’18.

The nine banks include the five tier-1 banks which are Access Bank, First Bank, GTBank, UBA and Zenith Bank, and leading tier-2 banks which includes Fidelity Bank, Stanbic IBTC Bank, Ecobank Nigeria and FCMB.

Analysis revealed that the slowdown in profit growth was occasioned by sharp increases in losses to bad loans (loan loss expense) which rose to N36.1 billion, from N18.1 billion in the corresponding quarter of 2019 (Q1’19), representing 99 percent year-on-year (YoY) uptick.

Consequently, loan loss expense as a share of PBT rose by 85 percent, YoY to 13.7 percent in Q1’20 from 7.4 percent in Q1’19, indicating more of the banks’ profits were consumed by losses to bad loans.

Vanguard