UBA Bank, controlled by Tony Onyemachi Elumelu, just declared a profit of N378.23 billion in its interim 2023 results.
The profit is the profit the bank made this year alone, spanning from January to June.
This is the first time in UBA history that they are making such a big profit, and it is a 437.8% increase from the profit the bank made this time last year from their half-year results.
For proper context, last year UBA made N70.34 billion in profit in the first half of 2022, and thus this year they made x437.
And UBA is not alone.
Zenith Bank declared N350.36 billion in profit, the same 2023 half-year result.
And it is the same bumper, mind-blowing profit for GT Bank and other tier 1 banks in Nigeria.
Bear in mind that Nigerian banks are making this bumper profit while the real sector, which is the manufacturing sector, is struggling, stuttering, and, for the most part, sacking their staff or closing shop because of worsening poverty and declining purchasing power.
Nigerian banks are not doing anything extraordinary to achieve this record feat.
The bumper profit is the result of what is called a foreign currency revaluation gain.
Foreign currency revaluation gains are very simple to understand.
Nigerian banks made investments in foreign currency when the dollar was 460 at the official market at the beginning of this year, before Asiwaju came in.
Those investments could be used to grant dollar-denominated loans to their big customers.
An example of such customers is MTN, Air Peace, Dangote refinery, BUA cement, and Dangote cement, or buying foreign bonds and US Treasury bills, or just converting their naira savings to dollars and then keeping them in the bank’s domiciliary account before Asiwaju took over.
Now that the local currency naira was devalued by this government, their prior investments went off the rails simply because those investments made when the dollar was 460 were not the same now that the dollar is trading at 760 at the official window.
They had a gain of 200 naira per dollar for each dollar invested this year before this government came in.
It is ironic that banks did not make this revenue from lending to businesses, which is primarily what banks were established to do.
This validates what I wrote the other time: for your small business to survive this economic tsunami, you need to diversify your revenue base to start earning in dollars.
That is the urgency of the moment for businesses operating in Nigeria and young people who choose not to go to Japan.
I beg you again.
From now until December, think of that shift that can attract dollar inflow into your business or into your savings account because it is simple to understand that it is where our economy’s trajectory is going.
But beyond this, contact your bank to guide you on how to invest in risk-free investments in the dollar, like buying US Treasury bills from Nigeria.
And if you have an appetite for taking risks, learn crypto and forex; trading them can change your life, though you will lose money as they are neither Ponzi schemes nor get-rich-quick schemes.
The lesson is simple: If you save and invest in dollars, you also get the gains that the banks are enjoying.
Nigerian banks have shown us that only businesses and individuals that save and earn in dollars can thrive and flourish in the next 8 years in this depressed economy, and this is why we need to take note and pay attention.
