Banking Sector

Growing Reliance on Central Bank Lending Signals Banking Liquidity Strain in 2023

Published

1 month ago

August 28, 2023

There is mounting evidence suggesting that commercial banks and merchant banks in Nigeria have increasingly turned to the Central Bank of Nigeria (CBN) for liquidity, with their borrowing from the apex bank surging over the past eight months of 2023.

As of the end of August 2023, commercial banks and merchant banks have collectively borrowed a substantial sum of N12.46 trillion from the CBN.

Comparatively, during the first eight months of 2022, these financial institutions borrowed N6.96 trillion from the central bank, reflecting a remarkable increase of 79 per cent.

Commercial banks and merchant banks typically utilize the Standing Lending Facility (SLF) window to access loans from the apex bank, while they also deposit funds with the CBN through the Standing Deposit Facility window (SDF).

The surge in borrowing during the first eight months of 2023 can be attributed to the backdrop of the CBN’s tightening monetary policy stance. The CBN, the regulatory body overseeing the banking sector, provides the SLF as a short-term lending facility for commercial and merchant banks to secure liquidity for their daily operations.

CBN data obtained reveals that between January and June this year, commercial banks and merchant banks borrowed N10.25 trillion from the CBN via the SLF window, marking a staggering increase of 138 per cent Year-on-Year (YoY) compared to the N4.3 trillion borrowed during the corresponding period in H1 2022.

The data also highlights that the borrowing figures for the first quarter, particularly the N4.95 trillion recorded, surpass the half-year data for 2022.

A detailed monthly breakdown reveals that in January, commercial banks and merchant banks borrowed N528.16 billion from the CBN, with this figure decreasing to N453.7 billion in February 2023.

However, in March, borrowing skyrocketed by 776.22 per cent to N3.98 trillion, the second-highest figure after the N4.47 trillion recorded in April 2023.

Meanwhile, May and June 2023 saw borrowing figures of N590.29 billion and N235.06 billion, respectively.

Furthermore, the SLF borrowing amounted to N908.43 billion in July and peaked at N1.3 trillion in August.

Commenting on this trend, Dr. Muda Yusuf, a former Director-General of the Lagos Chamber of Commerce and Industry, said, “This is a reflection of liquidity pressure some of the banks are going through. The facility is typically short-term. This may not necessarily indicate that the banks are stressed or unstable. Meanwhile, the recapitalization of banks is long overdue. The minimum capital requirements of N25 billion are no longer adequate, if discounted for inflation.”

Tajudeen Ibrahim, a financial expert at Chapel Hill Denham, added, “The development points to a lack of liquidity on the part of banks. Monetary policy has been tightening, and this has led to low liquidity. It is cheaper for banks to borrow from the CBN. This development is not positive but negative. We cannot continue to tighten because it will reflect on economic growth.”

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Banking Sector

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

Published

4 days ago

September 28, 2023

Samed Olukoya

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.

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

Published

6 days ago

September 26, 2023

Investors King

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.”

Banking Sector

Central Bank of Nigeria Postpones 293rd Monetary Policy Committee Meeting

Published

1 week ago

September 22, 2023

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.