Nigeria&#8217;s top seven most profitable publicly-listed companies, including five banks, Dangote Cement, and MTN Nigeria, reported a total profit before tax of ₦1.89 trillion ($2.43 billion) in H1 2023. Bank profits surged due to gains from foreign exchange transactions. UBA led with ₦404 billion ($520 million), a 371% YoY increase. This trend diverges from the global norm, prompting calls for inclusive growth measures to address economic disparities and job losses, particularly in manufacturing.



Five banks, a cement manufacturer (Dangote Cement Plc), and a telecommunications company (MTN Nigeria Communications Plc) are among Nigeria’s seven most profitable publicly-listed companies in the first half of the year, collectively reporting a combined profit before tax of ₦1.89 trillion ($2.43 billion).



The five banks are United Bank for Africa Plc (UBA), Zenith Bank Plc, Guaranty Trust Holding Company (GTCO), FBN Holdings Plc, and Access Holdings Plc. Analysts attribute their profitability primarily to revaluation gains from foreign exchange (FX) swaps and forwards with the Central Bank of Nigeria (CBN).



UBA recorded the highest profit before tax, amounting to ₦404 billion ($520 million), reflecting a 371% increase compared to the ₦85.75 billion ($110.38 million) in H1 2022.



The dominance of banks in the list of most profitable companies in Nigeria contrasts with the global trend, where technology and oil companies typically lead in profitability.



President Bola Tinubu&#8217;s declaration on May 29 to unify exchange rates prompted the Central Bank of Nigeria&#8217;s (CBN) announcement on June 14 of a free-floating system. This transition enabled deposit money banks (DMBs) and foreign exchange market dealers to freely trade forex at market-determined rates, leading to a 40% depreciation of the currency against the dollar in June. Consequently, the official exchange rate increased from ₦463.38/$ to ₦776.8/$ today.



Analysts make a call to action for the government to implement measures that promote inclusive growth, address economic disparities, and ensure the prosperity of all sectors.



Economist Kelvin Emmanuel shedding light on the implications emphasizes to FORBES AFRICA about the stark imbalance in the nation&#8217;s economic landscape.



The profits amassed by these influential banks, according to Emmanuel, underscore a concerning reality – the fragility of Nigeria&#8217;s economic structure. He argues that this financial success primarily tied to FX transactions reveals a system that is skewed, with the banking sector thriving while other crucial segments, particularly manufacturing, face challenges. Job losses in Nigeria’s manufacturing sector has spiked to a three-year high.



Emmanuel asserts that the government must address key issues to rectify this economic disparity. He advocates for a strategic approach to &#8220;decouple inflation as a tool for adjusting the Monetary Policy Rate (MPR).&#8221; According to Emmanuel, this shift is crucial to making credit more affordable for the real sector, enabling increased production capacity.



Furthermore, Emmanuel urges policymakers to focus on stabilizing the FX markets. A stabilized FX environment is deemed essential for providing businesses, especially those in manufacturing, with easy access to raw materials and machinery. This, in turn, is crucial for boosting production and narrowing the gap between the flourishing banking sector and struggling manufacturing companies.



&#8220;It doesn’t speak well about an economy if the banks are doing better than manufacturing companies,&#8221; states Emmanuel, underscoring the need for a comprehensive economic strategy that fosters balanced growth across various sectors.



Moses Adeolubodun, an investor, expresses concern about heavy reliance on FX gains for profit, emphasizing the necessity of diversification for a more sustainable economic foundation.



Adeolubodun tells FORBES AFRICA, &#8220;Banks must guard against overreliance on short-term gains and focus on long-term strategies for sustained growth.&#8221;



He underscores the importance of a diversified economic landscape to mitigate risks linked to dependency on a specific sector.



&#8220;There is a need for policymakers to carefully monitor the impact of monetary policies on the economy and consider measures to ensure stability and resilience.&#8221;



He highlights the importance of a well-balanced and transparent foreign exchange policy to foster investor confidence and economic sustainability.

Banking in Nigeria

Five Banks Among Nigeria’s Top Seven Profitable Companies In First Half, Reporting $2.43 Billion In Collective Profit

Apple hit a new milestone on Wednesday, becoming the first publicly traded U.S. company to reach a market capitalization of over $2 trillion and doubling in valuation over the last two years.



KEY FACTS



The iPhone maker’s stock is up almost 55% so far in 2020, and shares have rallied more than 106% since the market hit a low point amid the coronavirus recession on March 23 (compared to the benchmark S&amp;P 500’s gain of 51% over that period).



Now trading at nearly $470 per share, Apple’s stock is at an all-time high, and Wall Street analysts are still quite bullish that it can continue to rally: 61% give it a “buy” rating and 27% a “hold” rating, according to Bloomberg data.



Apple’s market cap now eclipses that of other U.S. tech giants, including Microsoft ($1.7 trillion), Amazon ($1.6 trillion), Google parent Alphabet ($1.1 trillion) and Facebook ($761 billion).



Apple was also the first U.S. company to reach a $1 trillion market cap, which it did just over two years ago, on August 2, 2018.



On July 31, 2020, after reporting strong&nbsp;<a href="https://www.apple.com/newsroom/2020/07/apple-reports-third-quarter-results/" target="_blank" rel="noreferrer noopener">third-quarter earnings</a>, Apple surpassed Saudi state oil giant Aramco to become the world’s most valuable publicly traded company.



While Saudi Aramco&nbsp;<a href="https://www.cnbc.com/2019/12/12/saudi-aramco-hits-2-trillion-market-cap-on-second-day-of-trading.html" target="_blank" rel="noreferrer noopener">surpassed a $2 trillion valuation</a>&nbsp;in December 2019, plunging oil prices amid the coronavirus pandemic have since hurt its stock.



SURPRISING FACT



At $2 trillion, Apple’s market value is now&nbsp;<a href="https://twitter.com/charliebilello/status/1296095582533148674?s=20" target="_blank" rel="noreferrer noopener">higher than the GDP</a>&nbsp;of numerous developed countries, including Italy, Brazil, Canada, Russia and South Korea, to name a few.



WHAT TO WATCH FOR



Apple shares are about to get more affordable for investors, too. The company will finalize its four-for-one stock split at the end of August, which means a single share will be worth around $117. While the value of the company will remain the same, there will now be more shares available trading at lower prices.



KEY BACKGROUND



Apple has thrived during the pandemic, as many people were forced to stay at home. The company has benefited from work-from-home trends and strong online sales; It posted record third-quarter earnings in late July, with&nbsp;<a href="https://www.apple.com/newsroom/2020/07/apple-reports-third-quarter-results/" target="_blank" rel="noreferrer noopener">nearly $60 billion in revenue</a>, not to mention double-digit growth in its products and services segments.



FURTHER READING



<a href="https://www.forbes.com/sites/sergeiklebnikov/2020/08/13/competition-from-apple-wont-derail-peloton-analysts-say/">Could Competition From Apple Derail Peloton? Not So Fast, Analysts Say</a>&nbsp;(Forbes)



<a href="https://www.forbes.com/sites/sergeiklebnikov/2020/07/24/apple-microsoft-amazon-google-and-facebook-make-up-a-record-chunk-of-the-sp-500-heres-why-that-might-be-dangerous/">Apple, Microsoft, Amazon, Google And Facebook Make Up A Record Chunk Of The S&amp;P 500. Here’s Why That Might Be Dangerous</a> (Forbes)



-Sergei Klebnikov, Forbes Staff

Tag: trillion

FORBES AFRICA SOCIAL MEDIA

Five Banks Among Nigeria’s Top Seven Profitable Companies In First Half, Reporting $2.43 Billion In Collective Profit

Apple Becomes First U.S. Company Worth More Than $2 Trillion