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Nigeria’s Central Bank Sends Conflicting Signals to Markets with Interest Rate Hike

Rather than stem inflationary pressures and encourage FX inflows, I believe the hike may lead to inadvertent volatility in the market



A money changer holds Turkish lira banknotes next to U

Market experts have said the Central Bank of Nigeria led monetary policy committee is sending mixed signals to the nation’s financial markets on its police direction.

On Tuesday, the monetary policy committee increased monetary policy rate by 25 basis points to 18.75% while the Cash Reserve Ratio was left unchanged at 32.5 per cent and the liquidity ratio at 30 per cent. The asymmetric corridor was narrowed from +100/-700 basis points to +100/-300 basis points.

According to Abiola Rasaq, former Economist and Head of Investor Relations at United Bank for Africa Plc, “Rather than stem inflationary pressures and encourage FX inflows, I believe the hike may lead to inadvertent volatility in the market. Yields may gradually rise; even so, such market relations may be short-lived, pending clarity in the broader monetary policy stance.

“The rally in the equity market may take some breather, as a transitory rise in yield environment and overall volatility may subdue the risk on sentiment, which has spurred the strong 28.8percent year-to-date return”.

The 25 basis points (bps) hike in the MPR sends a negative and contradictory message to the market regarding the monetary policy authority’s direction.

He says, “The increase in MPR by 25 basis points (bps) sends a negative and conflicting signal to the market on the policy direction of the monetary policy authority. The CBN, the administrative body and secretariat of the policy committee, has recently signalled a renewed accommodative stance, which may be justified given the liberalisation of the FX market.

“Notably, there has been a reduction of CRR of merchant banks, which is commendable and aligns with the fundamentals of this wholesale banking model, compared to commercial banking. In addition, the CBN is streamlining the CRR of commercial banks to ensure the mandatory deposits are not unduly punitive. These actions release more liquidity to the system and are indeed expected to encourage banks to lend more to the real sector,” Rasaq said.

The market had already reacted to presumed shift in monetary policy with 150bps decline in Sovereign yield but the 25bps rate hike creates confusion.

“Interestingly, the market has steadily reacted to this presumed shift in monetary policy expectations, with some 150bps decline in the Sovereign yield environment. However, this new 25bps hike in the policy rate sends a confusing signal. The argument for this hike may be justified by the rising inflation and continued depreciation of the Naira, albeit this new hike may not address these problems now.

“Hopefully, there would be a clearer picture on monetary and fiscal policy orientation once a substantive CBN Governor is appointed and we have the full complement of Executive Cabinet when Ministers are appointed,” he said.

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

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Banking Sector

Access Bank, Others Collect N154 Billion in Electronic Banking Fees in H1’23, a 16.7% YoY Surge



Global Banking - Investors King

In the first half of 2023, customers of Nigeria’s top nine commercial banks paid a whopping N154 billion in fees for utilizing electronic banking services, reflecting a robust 16.7% year-on-year increase compared to H1’22’s N131.97 billion.

The data, extracted from the financial statements of these banks, underscores the escalating trend of Nigerians embracing electronic payment channels.

Leading the pack in revenue generation from these fees is Access Bank, amassing N43.9 billion, followed by United Bank for Africa Plc (N51.07 billion), Zenith Bank (N22.27 billion), Guaranty Trust Bank (N21.2 billion), and others like Stanbic IBTC (N2.14 billion), First City Monument Bank (N7.4 billion), Unity Bank (N1.96 billion), Fidelity Bank (N1.85 billion), and Wema Bank (N3.13 billion).

Electronic banking services encompass a gamut of options, including internet banking, mobile banking, ATMs, and Point of Sale (PoS) systems.

Recent data from the Nigerian Interbank Settlement System (NIBSS) for Q1’23 indicates a substantial surge in electronic transactions.

Transaction volume increased by 209% YoY to 4.7 billion, and transaction value grew by 48% YoY to N137.52 trillion.

The nine banks collectively raked in N66.7 billion in account maintenance fees and commissions during H1’23, reflecting a 14.7% YoY rise.

Zenith Bank led this category with N21.02 billion, trailed by Access Bank (N13.36 billion), Guaranty Trust Bank (N10.5 billion), and United Bank of Africa (N9.6 billion).

Overall, the banks’ cumulative net fees and commission income registered a substantial 20.7% YoY growth, reaching N448.47 billion in H1’23 from N371.43 billion in H1’22.

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Banking Sector

Access Holdings Posts 52.6% Profit for the First Half of the Year

Parent Company of Access Bank Celebrates Remarkable Financial Performance in H1’23



Access bank

Access Holdings Plc, the parent company of Access Bank, has reported a 58.9 percent surge in gross revenue to N940.3 billion for the first half of 2023.

The financial services giant also recorded remarkable growth in Profit Before Tax (PBT) and Profit After Tax (PAT) at 71.4 percent and 52.6 percent, respectively, culminating in N167.6 billion for PBT and N135.4 billion for PAT during the same period.

These financial milestones were unveiled as part of Access Holdings’ Audited Consolidated and Separate Financial Statements for the period concluding on June 30, 2023.

The driving force behind this unprecedented growth can be attributed to a potent combination of factors. A 63.0 percent growth in interest income and a 51.9 percent increase in non-interest income fueled the surge in gross revenue.

Access Holdings also witnessed a 35 percent year-to-date growth in customer deposits, capping the first half of 2023 at an impressive N12.5 trillion. This remarkable achievement encompassed all business segments, reinforcing the Group’s status as Nigeria’s largest financial institution by total assets.

The company’s total assets grew by 39.0 percent year-on-year to N20.9 trillion while shareholders’ funds surged by 40.6 percent to N1.7 trillion.

These astounding figures underline the Group’s ability to generate value from a diversified business portfolio, spanning banking, asset management, and payment services.

Herbert Wigwe, the Group Chief Executive Officer of Access Holdings Plc, commented on the company’s positive performance, saying, “Our growth plans for the African continent remain firm and clear, driven by the strong long-term growth prospects and trade opportunities seen across many of the countries.”

He went on to emphasize the company’s commitment to its 5-year cyclical strategy, stating, “Our primary objective remains to transform Access Holdings Plc into a leading financial and ecosystem player, fostering opportunities for shared prosperity among all stakeholders.”

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Banking Sector

Central Bank of Nigeria Postpones 293rd Monetary Policy Committee Meeting



Central Bank of Nigeria - Investors King

The Central Bank of Nigeria (CBN) has announced the postponement of its 293rd Monetary Policy Committee (MPC) meeting, originally scheduled for September 25th and 26th, 2023.

Dr. Isa AbdulMumin, the bank’s Director of Corporate Communications, released a statement on Thursday confirming the decision.

In the statement, Dr. AbdulMumin stated, “The Monetary Policy Committee of the Central Bank of Nigeria has deferred its 293rd meeting, which was initially planned for Monday and Tuesday, September 25th and 26th, 2023, respectively. A new date will be communicated in due course. We regret any inconvenience this change may cause our stakeholders and the general public.”

While the CBN did not provide an official reason for the postponement, some industry experts suggest it may be related to the pending approvals for the newly appointed governor and deputy governors of the bank.

President Bola Tinubu recently nominated Yemi Cardoso as the potential head of the CBN. Additionally, Tinubu has endorsed the nominations of four new deputy governors for the apex bank, who are expected to serve for an initial term of five years, pending confirmation by the Senate.

The nominated deputy governors are Emem Usoro, Muhammad Abdullahi-Dattijo, Philip Ikeazor, and Bala Bello. However, the appointment of the CBN governor is contingent upon Senate confirmation, which is currently on a yearly recess.

The CBN assures stakeholders and the public that the rescheduled MPC meeting date will be communicated promptly as soon as it is confirmed.

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