Even investor favourite GT Bank posted rise in pre-tax profit of only 7% for the nine months, compared with a 48% rise during the same period last year. Standard Banks Nigerian business, Stanbic IBTC, was among those that managed to buck the trend, more than doubling profit.
"Nigerian banks are under pressure and on average profitability will decline this year," says Ronak Gadhia, Africa equity analyst at frontier-market investment banking boutique Exotix. Ecobank analyst George Bodo is also expecting a further fall in banks profit in the fourth quarter, according to Reuters.
This is despite strong performance in the equity market, as global investor enthusiasm for frontier markets grows. Nigerias all-share index continued its rise this autumn. Year to date it was up by around a third at the end of November, higher than average for frontier markets, and compared with a 7% fall at MSCIs emerging market index.
It is little wonder Exotix itself is hiring. Last month Ali Khalpey joined as head of equities from Renaissance Capital, where he was head of African equities. The firm also named Kato Mukuru, previously at Citi, head of equity research; Sruti Patel head of sales, from Standard Bank; and James Busch head of trading, from Renaissance Capital.
Gadhia and other analysts give several reasons for the results, including higher levies to the state bad bank and central bank regulations, which hiked cash reserve ratios for public sector deposits from 12% to 50% in July to counter what was called banks "perverse incentive structure" in recycling government deposits in government securities.
The central bank, noted at the time a build-up in banks excess liquidity, but still sluggish private-sector credit growth. It further highlighted risks to the exchange rate, and what it called a "loose fiscal stance" during 2013 coupled with the danger of a drop in government revenues from oil, due in part to oil theft and shale-oil developments.