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BusinessDay computed and compiled the return on equity for 12 Nigerian listed deposit money banks, by dividing their net profit by total equity as at March 31, 2019. From our computation, ROE for the banks covered average 4.5 percent.
One of the most important profitability metrics is Return on Equity (ROE), which reveals how much profit a company earned in comparison to the total amount of shareholder equity found on the balance sheet.
ROE is a veritable financial health indicator for a firm because it compares it against peers and generally the higher the better. Some industries have a high ROE as they require little or no assets while others require large infrastructure before they generate profit.
A business that has high return on equity is more likely capable to generate cash internally. For the most part, the higher a company’s figure is compared to its industry, the better. Simply put, the higher the ROE, the more easily, a company will able to raise money for growth.
Below are top-five banks who delivered the most returns to owners’ funds in the first three months of 2019.
Segun Agbaje, Guranty Trust Bank Plc (ROE: 7.86%)
Nigeria’s most-capitalized lender, Guaranty Trust Bank returned about 8 percent to shareholders’ funds in the review period, the highest among the banks compiled. Implying that for every thousand naira of investors’ fund, the bank returned N80.
The tier-one lender recorded an uptick of 11 percent in its profit to N49.3 billion, the second-biggest in the industry. Funds of shareholders entrusted with the lender grew 17 percent to N627 billion in the review period compared with N535 billion a year earlier.
The activities of the bank are overseen by Segun Agbaje, the chief executive, who also doubles as director on Mastercard Advisory Board Middle East and Africa.
Awards he has won as the Managing Director include Best Bank in Nigeria by Euromoney; African Bank of the Year by African Banker Award; Best Bank in Nigeria by World Finance United Kingdom among others.
Yinka Sanni, Stanbic IBTC Holdings Plc (ROE: 7.28%)
Stanbic IBTC Holdings Plc, parent to Stanbic IBTC Bank, returned 7.28 percent on shareholders’ funds in the first quarter of 2019, to emerge the second-best performer in this regard.
This connotes that the firm delivered 7 percent gain per naira of owners’ equity. A snapshot of its earnings score-cards showed that while profit dipped 18 percent to N19 billion in the review period, equity grew 35 percent to N263 billion.
Yinka Sanni was appointed chief executive of the group January 19, 2017. He has also headed the banking and pension arm of the group before his current position.
Herbert Wigwe, Access Bank Plc, (ROE: 7.14%)
The country’s biggest lender by assets, Access Bank Plc, returned 7.14 percent to rank third on the list. The merger deal between the tier-one lender and the defunct Diamond bank was finalized in first quarter, in which the combined entity became Africa’s largest bank by retail base.
This helped trigger the new entity’s profit by 86 percent to N41 billion in first quarter, while shareholders’ funds jumped to N576 billion from N454 billion a year before.
Herbert Wigwe heads the bank as the chief executive officer, and also chairs Access Bank UK Limited.
Under Wigwe, Access Bank has won a number of awards. The lender won the Bank of the Year and CEO of the year at the BusinessDay Banking awards in Lagos. It won the Karlsruhe Sustainable Finance Award in 2016, 2017 and 2019.
Ebenezer Onyeagwu, Zenith (ROE: 6.43%)
One of Nigeria’s biggest lenders, Zenith Bank returned 6.43 percent to shareholders in the first quarter of 2019. This means investors made N7 back from every N100 investment.
Zenith grew its profit by 7 percent to 50.23 billion. Shareholders funds grew 6 percent to N780 billion in the review period compared with N735 billion a year earlier.
Ebenezer Onyeagwu is new CEO of the tier one bank. He was appointed to take over from Peter Amangbo whose tenure expired in May 2019.
Kennedy Uzoka, Group CEO, UBA Group (ROE: 5.28%)
UBA returned 5.28 percent on shareholders’ funds in the first quarter of 2019.
With its performance, the shareholders of the tier-one lender gained N5.28 on each hundred naira capital invested.
UBA grew profit by 21 percent in the period to N28.67 billion from N23.74 billion, the company financials show. In the quarter, total equity was N543 billion, up from N537 billion recorded a year ago.
Kennedy Uzoka Was appointed Executive Director in 2010 and GMD/CEO in 2016. He holds a BSc. in Mechanical Engineering from the University of Benin and an MBA from the University of Lagos.
Uzoka has over two decades of experience covering Core Banking, Corporate Marketing Communications, Strategy, and Business Advisory Services.
