Zenith, Access Bank challenged by their exposure to Ghana Eurobond—Banker

The Banker Magazine has said that Zenith Bank and Access Bank were severely impacted by their exposure to Ghanian Eurobond. According to the banker in its 2023 publication of top 1000 world banks said that Nigerian banks “experienced a challenging year in 2022, facing pressure from rising inflation and a weakening currency at home, as well as in their regional subsidiaries. Such difficulties have subsequently intensified, with the Naira hitting a fresh low against the dollar in June following government efforts to reform the local foreign exchange market. The country’s largest lenders, Zenith Bank and Access Bank, were severely impacted by their exposure to Ghanaian Eurobonds, with the government in Accra warning investors in November of a 30% haircut in the face of a looming debt crunch. 

Zenith and Access – whose Ghanaian subsidiaries are among the country’s top 10 lenders by assets – both reported an almost 8 per cent drop in Tier 1 capital in 2022, which impacted their positions in the main Top 1000 World Banks ranking. The lenders also saw drops in pre-tax profits (PTP) of 9.24% and 13.79%, respectively. United Bank for Africa (UBA), the country’s fourth-largest lender by Tier 1 capital, is Nigeria’s best-performing bank for 2023 among the five biggest domestic lenders by Tier 1, rising to the country’s top position from the bottom of the pile last year. Thanks in part to its far smaller Ghanaian exposure, UBA is the only Nigerian lender in this year’s Top 1000 to post a significant rise in Tier 1 capital, and the only one of the five to increase its PTP, by 17.32%. In addition to topping the table for profitability and return on risk, UBA has also scored strongly in asset quality, liquidity and soundness. The bank’s strong Tier 1 capital growth saw it gain 50 positions in the Top 1000, settling at 645th place in the main ranking.

“Guaranty Trust Bank (GTB) retains its position as the country’s overall second-best performing bank in the 2023 table. Nigeria’s third-largest lender recorded table-topping scores for leverage, soundness and liquidity. While its capital adequacy ratio fell for 2022, it remains the highest among the country’s major lenders. GTB also scores well for profitability, recording the highest return on assets score for Nigerian lenders in the Top 1000. GTB’s Tier 1 capital position was unchanged for the year. The bank rose two positions to 596th place in the overall rankings. Zenith Bank, which remains the country’s largest lender by Tier 1 capital, moves up one spot to third position in this year’s performance league table, swapping places with Access Bank. Zenith scores highly for operational efficiency, thanks to a strong cost-to-income ratio. In spite of its capital woes, the bank recorded a 16.3% growth in assets in 2022.

Nigeria’s top 5 banks – ranked by Tier 1 capital and performance