By Aduragbemi Omiyale
The 2024 Proshare Bank Strength Index (PBSI) report has rated Access Holdings Plc as the leading Tier-1 banking in the country among its peers, GTCO, Zenith Bank, FBN Holdings, UBA, and Ecobank.
Access Holdings occupied the position due to its proactive approach to addressing macro and microeconomic risks.
The report draws parallels to the challenges faced by United States banks, such as Silicon Valley, First Republic, and Signature Banks, in 2023 due to poor asset and liability management (ALM).
The PBSI evaluated the banks based on a comprehensive set of financial metrics derived from audited financial statements for the 2023 financial year and concluded that the lender recorded significant strides in the banking sector.
With the Central Bank of Nigeria’s ongoing banking sector recapitalisation programme, the report highlights the importance of investment in financial technology, customer service scalability, and digital asset engineering between 2024 and 2026.
The analysts emphasised that, “With higher capital levels, banks must use the larger amounts of cash available to improve shareholder returns and customer service experiences.
“Many banks will get cut at the knees by lacking a deliberate strategy to transition from cash flow to value creation.”
The report further highlighted Nigeria’s economic trajectory, noting, “Nigeria’s GDP in 2005 was N38.78 trillion and rose to 77.94 trillion, roughly two times in 2023, suggesting an average annual growth rate of 3.55 per cent in the last two decades.
“However, between 2000 and 2005, bank equity sizes grew over ten times or by 1,150 per cent from N2billion to N25billion. In other words, for a decade and a half, banks have used ten times more equity in their businesses than before 2005, yet the country’s GDP growth has been modest.”
The report, however, clarifies that simply raising Nigerian banks’ equity base is not a guarantee for economic growth and development.
“Transforming bank equity into drivers of economic growth requires more than money; it requires a coordinated public and private sector plan, with what Proshare analysts have repeatedly called a whole-of-government approach to policies, programmes, and processes,” it noted.
Reviewing bank performances in 2023, Proshare analysts observed that banks were pursuing increasingly aggressive approaches to acquiring digital market share while supporting lower operating costs (lower cost-to-income ratios (CIRs)).
Dipo Olowookere