Banking Sector

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

Published

3 weeks ago

August 26, 2024

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.

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Samed Olukoya

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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Appointments

Keystone Bank Receives New Board Chairman, Directors From CBN

Published

11 hours ago

September 18, 2024

Bassey Marshall

It is the dawn of a new era for Keystone Bank, a top player in the Nigerian banking sector.

As part of a broader strategy to ensure sustained growth for Keystone Bank, the Central Bank of Nigeria (CBN) has approved a new chairman and board of directors for the financial institution.

The new board consists of a new board chairman, five non-executive directors, and two new directors, all carefully selected to take the bank to new heights.

The apex bank confirmed the latest development via a statement on Wednesday.

Steering the ship of leadership is Lady Ada Chukwudozie, as the new board chairman.

Lady Ada Chukwudozie, brings with her a truckload of experience.

A prominent figure in Nigeria’s corporate sector, Ada has nearly three decades of experience in business strategy, management, and administration.

Her expertise cuts across multiple industries, including De-Endy Industrial Company Limited, Dozzy Group, the Manufacturers Association of Nigeria, and Vogue Afrique Magazine.

Indeed, to whom much is given, much is expected.

With her extensive background and experience, Ada will now shoulder the responsibility of guiding the bank toward achieving its long-term goals.

The good news is that she is not alone. Joining her on the board are five non-executive directors, each bringing their unique skills to the table.

The five non-executive directors are Abdul-Rahman Esene, Mrs. Fola Akande, Akintola Ayodeji Olusoji, Obijiaku Samuel, and Senator Farouk Bello.

Together, they will play a critical role in shaping the future of the bank.

Furthermore, two new executive directors, Ladi Oluwole and Abubakar Usman Bello were also confirmed by the CBN.

Meanwhile, Keystone Bank’s Managing Director and CEO, Hassan Imam, bragged about his confidence in the new team.

To him, he was certain they would drive the bank’s growth and ensure reliable service for customers.

Imam noted that their wealth of experience would play a crucial role in the bank’s continued repositioning and growth.

His words: “We are pleased to welcome the new chairman, non-executive directors, and executive directors to the board of Keystone Bank.

We are confident that their extensive experience will be invaluable as we continue to reposition the bank to seize emerging economic opportunities while maintaining strong corporate governance and providing our customers with a secure and reliable banking experience,” Imam concluded.

Recall that in January, the CBN dissolved the board and management of Union Bank, Keystone Bank, and Polaris Bank.

Banking Sector

Zenith Bank Extends Public Offer and Rights Issue by Two Weeks

Published

1 week ago

September 10, 2024

Investors King

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.

Banking Sector

Unity Bank Projects N27b In Q4 Earnings, Targets N4b Profit

Published

1 week ago

September 10, 2024

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.