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MPR: Banks Raise Interest Rates on Existing Loans

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Bank customers with existing loan obligations must brace for higher levels of indebtedness as the Deposit Money Banks have begun an upward review of the interest rates on all outstanding loans.

The development followed Tuesday’s increase of the Monetary Policy Rate from 12 per cent to 14 per cent by the Central Bank of Nigeria’s Monetary Policy Committee.

Multiple banking sources told one of our correspondents on Thursday that the lenders would as early as next week begin to dispatch letters to their customers, informing them of the upward review of the interest rates on their loans.

“Banks don’t waste time on matters like this. The increase in the MPR means interest rates on loans have to go up. We have started writing letters to our customers. A few may go this week, while more will go next week. Customers will get the letters in emails and hard copy,” a top executive of a tier-1 bank told one of our correspondents under condition of anonymity on Thursday.

Other top bank officials, who confirmed the development, did not state the rate of increase in the interest rates on the outstanding loans.

They said the upward reviews of the rates were being done with keen consideration for certain conditions relating to each bank customer.

“What applies to customer A may not apply to customer B. We take keen look at each customer and their peculiar situation, including their loan history with us, before making the review. But the fact is that an increase is inevitable with the hike in the CBN’s MPR,” another top bank official said.

Banking experts say the MPR, often called the benchmark interest rate, is the yardstick for other interest rates bank charges on loans advanced to their customers.

The MPC had after its bi-monthly meeting on Tuesday increased the MPR from 12 per cent to 14 per cent. The measure was meant to reduce the amount of cash in circulation and thus fight inflation, which hit 16.5 per cent in June.

A financial analyst at BGL Plc, a research and investment advisory firm, Mr. Femi Ademola, said banks usually reviewed interest rates on loans whenever the CBN raised or lowered the MPR.

This, he said, was why banks usually included the clause: ‘Subject to prevailing interest rate’ on their offer letters for loans.

Officials said the latest review by the banks might move the interest rate on some loans from between 25 per cent and 27 per cent to around 30 per cent.

Ademola said while the banks would enjoy more interest income from the upward review, a small part of this amount would be paid to savings account customers as interest on their deposits.

In line with the CBN regulations, savings account customers are paid 30 per cent of the MPR as interest on their deposits. With the increase in the MPR, about 0.6 per cent of each customer’s savings account deposit will be credited to their account as accrued interest on their savings.

Analysts described this as negligible compared to what the banks would earn from the additional interest rate imposed on loans.

Meanwhile, manufacturers said the decision of the CBN to raise the MPR was a deadly blow to an already comatose manufacturing sector, adding that more sector operators were bound to close shops.

A local manufacturer of envelopes and Managing Director, FAE Limited, Princess Layo Okeowo, said, “I just pray that we do not all close our doors. The foreign exchange situation is already becoming unbearable with manufacturers having to wait for ages after bidding to get dollars. The increase in interest rate is a bitter pill to swallow and it has made an already bad situation worse.

“It is certain that the banks will readjust their interest rates even for people who have outstanding loans. It is certain that within the next one week, the banks will start writing letters to their debtors notifying them of increased interest rates on loans.

“Manufacturers will have to increase prices and already, the purchasing power is very low and the number of our customers has reduced drastically.”

An executive director in one of the leading aerosol firms in the country, Mr. Kingsley Oni, said because of the scarcity of dollars, his company had to lay off workers for the first time in its more than 20 years’ of existence.

Oni said, “We have over 2,000 workers; because we are not getting dollars, for the first time, we are retrenching. The point is, when they keep raising these interest rates, the impact on the manufacturing sector is very negative.

“The CBN cannot control inflation, but a situation where a country is in this situation and you still find a lot of private jets all over Abuja is what baffles me. One of those jets can be sold and the money ploughed back into the real sector to create jobs if the government is really serious.”

The Chairman, Qualitek Industries, Chief Olayinka Kufile, said although the CBN was trying to control inflation, the reality was that many industries in the country had become comatose.

He said, “Most activities in the manufacturing ector have been grounded. In the basic metal industry where I operate, everything is flat, because while we were trying to get out of the problem of the dollar increasing from N158 to a dollar to N200 to a dollar, we lost a lot of money. Before we could even get out of that, the dollar kept increasing and now it is more than N300 and the people who took loans at the exchange rate of N197 to a dollar are in heavy debts.

“If the government is hoping to earn money in taxes from the non-oil sector, they cannot get those taxes where companies are not producing and making money. Most industries today are not producing and they have reduced their staff strength to near zero.”

For the Director-General, Manufacturers Association of Nigeria, Mr. Remi Ogunmefun, within the concept of economics, the CBN was right to increase the benchmark rate in order to spur savings and investment as well as control inflation.

He said, “The implication of the increase for manufacturers is that the cost of borrowing will rise higher than it is already. It is quite unfortunate because over the years, we have been clamouring for a single digit interest rate.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Banking Sector

Wema Bank Plc Announces Dividend Declaration and Director Appointments at 2022 AGM

Wema Bank Plc recently held its highly anticipated Annual General Meeting (AGM) on May 31, 2023, in a fully electronic format.

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Wema Bank - Investors King

Wema Bank Plc recently held its highly anticipated Annual General Meeting (AGM) on May 31, 2023, in a fully electronic format.

During the meeting, several crucial resolutions were presented and subsequently passed, marking significant milestones for the bank.

One of the most notable resolutions was the declaration of a dividend. The shareholders unanimously approved a dividend payout of 30 kobo per ordinary share of 50 kobo each. The dividend, stemming from the bank’s profits in the Financial Year ended December 31, 2022, will be paid to members on the company’s register as of May 9, 2023, after the deduction of the appropriate Withholding Tax.

Also, the AGM witnessed the ratification of a new Director’s appointment. Mr. Tunde Mabawonku was unanimously appointed as an Executive Director of the bank, bringing his wealth of experience and expertise to the organization.

In addition, the AGM addressed the re-election of Directors retiring by rotation. Shareholders unanimously voted for the re-election of Mr. Abubakar Lawal, Mr. Adeyemi Adefarakan, and Prince Olusegun Adesegun as Non-Executive Directors on the Bank’s Board.

Another significant resolution passed at the AGM involved the authorization of Directors to determine the remuneration of the auditors. The shareholders unanimously empowered the Board of Directors to fix the fees payable to the Bank’s Auditors.

Additionally, the election of members of the audit committee was a vital aspect of the AGM. The shareholders elected Professor Oyelakin Samuel Awobode, Mr. Ogbonna Joe Anosikeh, and Mrs. Omobola Esther Osijo as the shareholders’ representatives to the Bank’s Statutory Audit Committee.

Meanwhile, Mr. Abubakar Lawal and Mrs. Bolarin Okunowo were chosen as the Board’s representatives on the Committee.

Lastly, the AGM approved the directors’ fees for the financial year ending December 31, 2022. The Directors’ annual fee was fixed at N62,000,000.00, with the Chairman receiving N9,500,000.00 and Non-Executive Directors each receiving N7,500,000.00. Additionally, a sitting allowance of N300,000.00 was approved for the Chairman and N250,000.00 for other directors for the 2023 financial year. These fees reflect the bank’s commitment to fair and competitive compensation for its leadership team.

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Banking Sector

Unity Bank Grows Gross Earnings to N57Billion in 2022FY, Builds Momentum as Profit Grows by 21% in Q1/2023

Unity Bank total comprehensive income rose by 262.1% to N1.2 billion from N744 million in the corresponding period of 2021

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Nigeria’s retail lender Unity Bank Plc has posted a Profit Before Tax of N1.1 billion for its full-year results that ended Dec 2022, even as its gross earnings rose by 13.1% to N57 billion from N50.2 billion in the corresponding period of 2021.   

The Bank in its audited full-year financial statement submitted to the Nigeria Exchange Group Limited recorded growth in key performance indicators as reflected in the interest income, loans and advances to customers, customer deposits, and profits.

A major highlight of the financial year is the growth in total comprehensive income, which rose by 262.1% to N1.2 billion from N744 million in the corresponding period of 2021. The Bank grew Profit Before Tax (PBT) by N1.1 billion, while Profit After Tax stood at N941.4 million.

With the loan book sustaining an expansion by 7.5% to N289.4 billion from N269.3 billion within the period under review, the interest and similar income consequently witnessed significant growth rising 7.5% to close at N48.9 billion compared to N43.2 billion in the corresponding period of 2021.

Similarly, income from fees and commissions recorded significant growth, rising by 25.7% to N7.68 billion from N6.1 billion within the period under review.

More so, deposits from customers saw marginal growth, increasing by 1.6% to N327.4 billion from N322.2 billion in the corresponding period of 2021 as the Bank pushes for deeper penetration of its retail footprint with the rollout of products targeting different segments of the market.

Meanwhile, the Bank also released its unaudited financials for Q1, 2023, in which it sustained improved performance, posting a 21% growth in Profit After Tax, PAT to N1.04 billion from N869.2 million in the corresponding period of 2022. Its gross earnings for the quarter also rose by 17% to N15.9 billion compared to N13.6 billion in the corresponding period of 2022.

Commenting on the financial statements, the Managing Director/CEO of Unity Bank Plc, Mrs. Tomi Somefun noted that the Bank’s focus on building back momentum continues to reflect in the key performance indicators despite economic headwinds and volatilities that characterized the operating environment in the 2022 financial year.

“There are highs and lows as we look at the gross earnings, with 13.7% growth, increase in liquid assets by 7.5% and deposits recording moderate growth of 1.6%, while maintaining steady growth in profitability”, she stated.

“Overall, the financial statement thus threw up both strong and less optimal points which inform the outlook for our business”, she further stated.

She reassures that going into the new financial year, the Bank will remain laser-focused on our strategic choices and key growth drivers to push all the indices and elevate growth to double-digit territory. “The performance posted for Q1’23 in terms of the PBT, gross earnings, and other key indicators are strong reinforcement of adequate measures being adopted and a testament of our resolve to sustain and equally improve upon the fundamental initiatives adopted to strengthen growth throughout the course of the financial year”, Mrs. Somefun stated.

She further said: “Since late 2022, the Bank has begun significant investment in technology and innovation in line with its strategic pursuits to win in the retail space with our focus on digital and lifestyle banking, dynamic product development, and accelerated onboarding. As part of our transformation journey, we will double down on these investments in the coming months in order to achieve our aspirations of (1) significantly reducing customer pain points and simplifying customer experience; (2) increasing the rate of customer acquisition; (3) expanding the frontiers of partnerships; and (4) ultimately developing new and sustainable income lines for the Bank.”

According to her, the Bank will further give attention to fast-paced process automation, cost and resource efficiency, targeted value chain relationships, and brand visibility as it expands the range of products and services to meet the evolving needs of its esteemed customers.

Analysts are of the view that the growing retail footprint driving the repositioning strategy of the Bank aligns with the market expectations, which is also reflected in the increasing uptake of the Bank’s offering.

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Banking Sector

International Banker Award 2023: Ebenezer Onyeagwu Named Best Banking CEO of The Year in Africa

The Group Managing Director/Chief Executive Officer of Zenith Bank Plc, Dr. Ebenezer Onyeagwu, has been named ‘Best Banking CEO of the Year in Africa’ in the International Banker 2023 Banking Awards.

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Zenith Bank AGM 2021

The Group Managing Director/Chief Executive Officer of Zenith Bank Plc, Dr. Ebenezer Onyeagwu, has been named ‘Best Banking CEO of the Year in Africa’ in the International Banker 2023 Banking Awards. The award, published in the Spring 2023 Issue of the International Banker Magazine, sees Dr Onyeagwu honoured alongside other individuals and banks from the Middle East and Africa.

Expressing gratitude for the recognition, Dr. Onyeagwu commended the Publishers of the International Banker for considering him a fitting recipient of the ‘Best Banking CEO of the Year in Africa’ award. He stated, “This award reflects the bank’s position as a leading financial institution in Nigeria and the African continent. It also attests to our commitment to principles of sustainability and high ethical standards, which have become integral to our overall strategy as an institution”.

He dedicated the award to the Founder and Chairman, Jim Ovia, CFR, for his guidance and mentorship; the bank’s management team and staff, for being the shoulder upon which his achievements and success as CEO rests; and the bank’s customers for making Zenith Bank their bank of choice.

Dr Onyeagwu’s outstanding career has led to him receiving multiple awards, including Bank CEO of the Year (2019) by Champion Newspaper, Bank CEO of the Year (2020, 2021 & 2022) by BusinessDay Newspaper, CEO of the Year (2020 and 2021) – SERAS Awards, and CEO of the Year (2022) – Leadership Newspaper.

As Group Managing Director/CEO, Dr Onyeagwu has led Zenith Bank to achieve tremendous feats and milestones in financial performance (including 47 per cent growth in the bank’s market capitalisation in four years), financial inclusion, corporate governance and sustainability. These efforts have culminated in several local and international awards and recognitions including being recognised as Number One Bank in Nigeria by Tier-1 Capital, for the 13th consecutive year, in the 2022 Top 1000 World Banks Ranking published by The Banker Magazine; Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020 and 2022; Best Bank in Nigeria, for three consecutive years from 2020 to 2022, in the Global Finance World’s Best Banks Awards; Best Commercial Bank, Nigeria 2021 and 2022 in the World Finance Banking Awards; Best Corporate Governance Bank, Nigeria in the World Finance Corporate Governance Awards 2022; ‘Best in Corporate Governance’ Financial Services’ Africa, for four consecutive years from 2020 to 2023, by the Ethical Boardroom; and the Most Responsible Organisation in Africa 2021 by SERAS Awards.

On March 25, 2023, he was conferred with a Doctorate Degree in Business Administration by the University of Nigeria, Nsukka, Nigeria’s first indigenous University, in recognition of his immense achievements as Group Managing Director/CEO of Zenith Bank as well as his contributions to the growth of the financial services sector in Nigeria and across the African continent. The award was given during the 50th convocation ceremony of the University.

Published by Finance Publishing Limited, the International Banker is a leading global source of authoritative analysis and opinion on banking, finance and world affairs. Its influence, integrity, accuracy and objective opinion have earned it global recognition. The International Banker Awards strive to recognise the most worthy financial institutions around the world – those not just doing their jobs well but exceptionally well – those operating at the industry’s cutting edge and setting new performance levels to which others will aspire. The 2023 Banking Awards focused on various criteria, including the provision of much-needed capital for economic growth, cutting-edge innovation to enhance security and efficiency, commitment to sustainability and ESG principles, as well as intelligent investing to maximise profits and shareholder value.

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