As financial inclusion increased in Nigeria recent years, banks have been the biggest beneficiaries as cash deposits from customers have continued to increase at breathtaking pace. Amongst the biggest beneficiary is Nigeria’s most profitable bank, Zenith Bank which analysts now forecast is set to become Nigeria’s first 6 trillion Naira bank after total assets reached N5.955 trillion at the end of 2018.
“At the moment, it is anybody’s guess exactly where Zenith Bank’s total assets reach at the end of the first quarter as double-digit treasury yields and lending rates could easy push total assets beyond N6 trillion without even accounting for the marketing push to get more deposits” said Maju Eldad, a lecturer in the Economics department at Federal University of Kashere, Gombe. “Since the bank is less than N50 billion short of achieving that target and we expect their Q1 earnings to be north of N50 billion, it will definitely be the first Nigerian bank to cross the N6 trillion mark.”
Late last year, the banking system was shaken up after Access Bank announced its surprise merger with struggling Diamond bank. The merger was expected to create a N6 trillion bank (combination of the total assets of Access and Diamond bank as at the end of the 3rd quarter 2018), however, after discounting for the N280 billion in non-performing assets in Diamond bank which is expected to be written off before the merger is completed, the total assets of the combined entity is expected to be in the region of N5.7 trillion, about N250 billion behind Zenith Bank but still ahead of First bank (N5.34 trillion), making Access bank the second largest bank by assets after the merger is completed later this year.
“We will have to wait and see the growth performance in the total assets of Access Bank and Diamond Bank as at the end of 2018 before we can ascertain if the combined entity will still be the biggest lender in Nigeria by assets, however, it is safe to say that Access will become the largest bank by customers once the merger is completed with about 29 million customers.” Eldad told BusinessDay.
The other two Tier one banks, UBA and GTBank are currently the 4th and 5th largest banks in Nigeria by assets after UBA reported total assets to be N4.5 trillion and GTBank reported total assets to be N3.4 trillion. As at the end of Q3 2018, UBA had trimmed the gap between its total assets and the assets to Access Bank (which is currently the third largest bank in Nigeria by assets) to around N45 billion from N104 billion as at H1 2018.
The news of Zenith Bank crossing N6 trillion mark will certainly impress the founder Jim Ovia, who has been increasing his stake in the bank in the past year. Zenith was earlier expected to relinquish its crown to Access bank as the largest lender by assets but as things look today, it seems like Zenith may keep their crown for at least another quarter or even the whole year. Whichever way, the Nigerian market is certainly big enough for two kings.