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Banking Sector

Nigeria’s Top Banks Benefit from MPR Surge, Generating ₦1.62 Trillion in Interest Income

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Global Banking - Investors King

Nigeria’s banking sector has witnessed a remarkable surge in interest income with top financial institutions generating a combined ₦1.62 trillion from loans and advances in the first half of 2024.

This represents a 120% increase from the ₦736.09 billion reported in the same period last year.

The unprecedented growth underscores the significant impact of the Central Bank of Nigeria’s (CBN) recent monetary policy adjustments.

The increase in interest income is primarily attributed to the CBN’s aggressive hike in the Monetary Policy Rate (MPR), which now stands at a record 26.25%.

This rate adjustment, aimed at combating inflation and stabilizing the naira, has had a profound effect on the banking sector’s profitability.

The five major banks driving this surge include FCMB Group Plc, Ecobank, Wema Bank Plc, FBN Holdings Plc, and Sterling Financial Holdings Company Plc.

These institutions have reported exceptional growth in their interest income from loans and advances, reflecting both the impact of the CBN’s monetary policies and the banks’ strategic adjustments.

Ecobank, a pan-African financial powerhouse, led the charge with an impressive ₦641.08 billion in interest income, a 160.1% increase from ₦245.43 billion in H1 2023.

Similarly, FBN Holdings saw its interest income rise to ₦568.9 billion, up by 131.8% from the previous year’s figure.

FCMB Group reported a 68% increase in interest income to ₦192.46 billion, while Sterling Financial Holdings recorded a 58% growth to ₦120.88 billion. Wema Bank posted a 76.1% increase to ₦94.25 billion in interest income.

The CBN’s decision to raise the MPR to its highest level to date was driven by the need to address persistent inflationary pressures and foreign exchange volatility.

The inflation rate peaked at 34.19% in June 2024, necessitating a stringent monetary policy to curb the surge and stabilize the currency.

The IMF has praised the CBN’s decisive action, noting that the policy shift is crucial in addressing Nigeria’s economic challenges.

The increase in MPR aims to manage inflation and mitigate the depreciation of the naira, which has been a significant concern for the Nigerian economy.

However, the hike in MPR has sparked concerns about its potential impact on the broader economy. Analysts warn that the increased cost of credit could dampen business investments and consumer spending, potentially slowing economic growth.

FBN Quest analysts have highlighted that while the MPR increase has bolstered bank earnings, it may also lead to reduced economic activity.

“The rate hike will likely suppress consumer spending and slow down business investments, potentially impacting overall economic growth,” they noted.

Professor Uche Uwaleke, a noted expert in capital markets, expressed mixed feelings about the policy. He acknowledged the CBN’s efforts to manage inflation but cautioned about the potential adverse effects on liquidity and credit costs.

“The MPR hike is intended to reduce liquidity and increase credit costs, which could have significant implications for economic output and the equities market,” he said.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Banking Sector

Zenith Bank Extends Public Offer and Rights Issue by Two Weeks

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Zenith Bank AGM

Zenith Bank Plc on Monday announced that it has obtained regulatory approval to extend its public offer and rights issue by two weeks.

In a statement released via the Nigerian Exchange Limited (NGX), the leading financial institution said its offers for both existing shareholders and new investors have been extended to September 23, 2024, from the initial closing date of September 9.

The bank attributed the extension to the nationwide protest that began on August 1, the same day the offers were opened.

Zenith Bank stated that the extension will provide shareholders with more opportunities to take advantage of the rights issue and allow the general public ample time to subscribe to the public offers.

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Banking Sector

Unity Bank Projects N27b In Q4 Earnings, Targets N4b Profit

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Unity bank - Investors King

Unity Bank Plc has projected gross earnings of N27 billion and a Profit After Tax of N4 billion in Q4, 2024, in its latest earnings forecast released to the Nigerian Exchange Group. 

Although the projected gross earnings represent a marginal increase from the N26 billion projected for Q3 2024, the lender continues to maintain a profitable outlook, with pre-tax profit expected at N4.2 billion.

An analysis of the earnings forecast shows that the lender also expects interest income to rise from N23 billion to N24.5 billion, with net revenue expected to rise marginally by 1.0% to N7.2 billion within the quarter compared to N6.5 billion in Q3, 2024.

Net operating income is projected at N12 billion, while cash flow from financing activities is projected to rise to N481.4 billion from N353.6 billion, a 1.3% projected increase on a quarter-on-quarter basis. This projected growth in cash flow from financing activities continues to reflect the lender’s growing liquidity position which is essential for sustained business operations.

The lender said it expects to cover the milestones with a consistent optimistic outlook in its projection, barring any significant changes in the operating environment, under which the assumptions were made.

The lender noted that it will continue to deliver top-notch customer-centric products and services, especially in the digital lending space following the roll-out of enhanced platforms and channels for superlative customer experiences.

Analysts are of the view that the Q4 forecast reflects a steady growth trajectory on the back of key performance indicators and strategic repositioning to hedge the challenging market conditions.

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Banking Sector

UBA Rewards 30 Lucky Customers in Legacy Promo

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UBA House Marina

As part of ongoing activities to commemorate its 75th anniversary,  United Bank for Africa (UBA) Plc, has rewarded 30 loyal customers with over N17 million in the just concluded draw for August.

The winners were announced following a transparent draw conducted  at the bank’s headquarters, which was streamed live on YouTube. Representatives from the National Lottery Regulatory Commission (NLRC) were invited to oversee the proceedings, ensuring fairness and compliance with regulations.

The bank said in a statement  that  inthe top tier, 10 lucky bumper account holders: Joshua Izenobor, Chigozie Victor Abel, Cornelius Peter Nwankwo, Joy Esele Asibor, Mohammed Abubakar, Marachi Jenifer Kevin, Chidinma J. Okoronkwo, Saidu Ahmadu, Philomena Ezekiel, and Peace Ogechi Idoko, emerged as winners of N1 million each.

UBA explained that in the second category, another group of 10 lucky customers were rewarded with N500,000 each. The beneficiaries of this prize are: Elizabeth Warekoromor, Deborah Ijeoma Simon, Prince Chukwuamago, Yohanna Cyrus, Aishatu Aliyu, Djachi Ben-Ikezam, Tibebi Glory Esiteh, Emmanuel C. Udekwe, Ozima Friday Asiku, and Beauty Danasabe.

The third category saw 10 more lucky account holders each receiving N250,000. These winners include: Olusegun Oke, Salisu Adamu, Sola Deborah Adeyeye, Chidozie Nwachukwu, Gloria Abimaje, Anyiwe Stephen Ifeanyi, Kehinde F Adefemiwa, Oluwakemi Olushola Olayande, Adamu Hajara Adamu, and Ruth Adugba

Group Head of Retail & Digital Banking,  UBA, Shamsideen Fashola, who congratulated all 30 winners after the draw,  encouraged others to keep saving for a chance to win in the next edition, adding that the bank plans to reward 75 winners in each of the three categories, with a total of 195 more customers to be selected in the coming months.

“This is just the beginning of our legacy promo draw, as there are still many more prizes to be won in subsequent monthly draws. These draws are purely transparent, and the next millionaire could just be you. We encourage our loyal customers to follow the stated guidelines to win, and they could just be the next millionaire,” Fashola said.

Group Head of Marketing and Corporate Communications, UBA,  Alero Ladipo, said that the bank is not conducting the draw for profit purposes but to ensure that its customers feel a sense of belonging.

“This initiative is part of UBA’s ongoing efforts to appreciate its customers and encourage a savings culture among our account holders. The UBA Legacy Promo is part of our CSR initiative to give back to society,” Ladipo said.

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