In 2023 and the first part of 2024, Nigeria’s top banks made a lot of money from foreign exchange (FX) gains, totaling about N3.37 trillion. This happened mainly because the Naira, Nigeria’s currency, lost value last year.
These FX gains include both money they have in hand (realized) and money they are supposed to get (unrealized), as reported by the banks.
The banks that made these gains are Access Holdings, FCMB, Fidelity, GTCO, Stanbic IBTC, UBA, and Zenith Bank.
Let’s look at how much these banks made from FX gains in 2023 and early 2024.
GTCO – N844.450 billion FX Gains
GTCO made the most FX gain among Nigerian banks, earning N844.450 billion in 2023 and early 2024.
In 2023 alone, GTCO made N345.070 billion from FX gains. This helped the bank grow its pre-tax profit by 184%, reaching N609.308 billion.
In the first quarter of 2024, the bank made another N499.380 billion from FX gains, leading to a pre-tax profit of N509.349 billion. This part of the gain in 2023 is still unrealized, meaning it’s money on paper but not in hand yet.
Zenith Bank Plc – N828.675 billion
Zenith Bank also did well, making N828.675 billion from FX gains in 2023 and early 2024.
The bank made N638.98 billion in 2023 and an extra N189.693 billion in the first quarter of 2024.
Zenith Bank’s total pre-tax profit for 2023 was N795.962 billion, the highest in Nigeria. This good performance continued with N320.194 billion in pre-tax profit for the first part of 2024, a 270% increase from the previous year.
Access Holdings – N748.159 billion FX gains
Access Holdings made a big FX gain of N748.159 billion in 2023 and early 2024. The company has operations worldwide and manages its currency well, allowing it to benefit from FX changes.
Though the 2024 gains have slowed, it only made 18% of the 2023 figure in the early part of 2024. However, the company still shows strong growth in profitability.
United Bank for Africa – N682.952 billion FX gains
UBA made N682.952 billion from FX gains in 2023 but only N23.695 billion in early 2024, showing how unpredictable FX markets can be.
In 2023, UBA made an incredible 814% increase in FX gains compared to 2022, but the gains dropped sharply in 2024.
Despite this, the bank’s pre-tax profit remained strong, growing by 155% year-over-year to N156.344 billion in early 2024.
First City Monument Bank (FCMB) – N116.443 billion FX Gains
FCMB made N116.443 billion from FX gains in 2023 and early 2024.
In 2023, the bank achieved an FX gain of N86.307 billion, a jump of over 1,000% from the previous year. By early 2024, the gains were N30.137 billion, about 30% of the 2023 FX gains. FCMB said these gains are realized, meaning they have the money in hand.
This strong performance boosted investor confidence and cash flow. The bank also showed growth in profits, increasing by 185% in 2023 and 193% in early 2024.
Other banks also did well. Fidelity Bank made N71.143 billion, and Stanbic IBTC made N24.569 billion in FX gains.
These FX gains helped boost their overall earnings, which include both interest and non-interest income.
The Nigerian government plans to introduce a one-time tax on these FX gains from 2023. This tax aims to fund important projects in education, healthcare, and infrastructure.
While this tax could help the economy and public services, it might lower banks’ profits and impact their shareholders. Banks will need new strategies to manage this and maintain investor trust.