The Power Of Value Capture And The Rains Of Profits In Nigerian Banking.

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The Power Of Value Capture And The Rains Of Profits In Nigerian Banking.

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The Power Of Value Capture And The Rains Of Profits In Nigerian Banking.

The Rains of Profits in Nigerian Banking and Power of Value Capture

The numbers are out and Nigerian banking is firing on all cylinders: “Nigerian banks recorded a combined pre-tax profit of N1.58 trillion in Q1 2024, marking a 263% year-on-year increase compared to N436 billion in Q1 2023, with GTCO posting the highest profit in Nigeria banking history for the quarter…Top performers in Q1 2024 included Zenith Bank (N320.2 billion pre-tax profit), FBN Holdings (N238.5 billion), Access Holdings (N202.7 billion), and UBA (N156.3 billion)…”,

Congratulations folks and well done. Nigerian bankers are the hardest working professionals in our nation. If everyone has the same level of productivity they have, Nigeria would have been a bigger Singapore. Period.

Yes, it is an industry where excuses are not tolerated, and the workers understand that loud and clear. Those days, I used to board diesel trucks from Apapa to Victoria Island to ensure diesel was delivered to Diamond Bank’s headquarters. I used to go to the VI NEPA office at 1am begging them to keep light on the Diamond Bank line. I worked for 3 years including on Christmas Day, Easter Day, etc without a vacation.  

But I enjoyed it because they elevated your spirit to see a mission which if you drop the ball, that mission could be imperiled. Go to night shift, sleep and the next day, the branches will not open because “system is down”. Why? The entry level engineers in the HQs did not complete the tasking end of day runs on time. Sleep twice, you are out!

So, when you look at these numbers, put everything in context: they’re coming from an industry which works and has figured out how to capture value (read my Harvard piece on capturing value here). 

GTBank’s GTCO has one of the finest genes; it has an industry-leading cost-to-income ratio, averaged over a decade, and that continues to show on its profitability. I am also happy to note that the elephant is dancing well despite the recent paralysis. So, guys, enjoy the party.

Now your question – why are banks breaking profit records when companies are closing and the economy struggling? 

My response: It is not the banking sector’s fault that the Central Bank of Nigeria (CBN) is increasing the prime rate which forces banks to hike interest rates on their customers. It is also not the banking sector’s fault that Nigeria floated its currency which delivers higher value for their foreign currency denominated financial instruments. So, if you visit your bank and the interest rate has gone up, do not curse the bank, ask the apex bank because those rates are partly driven by the central bank policy.

Now, he is defending the banks to protect his friends. That is not fair to a village boy; I hope you can take time and master how banks design their processes and playbooks to capture value in Nigeria.


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