With the increase to 18.5 percent in the Monetary Policy Rate (MPR) of the Central Bank of Nigeria (CBN), seven banks have reaped N1.02 trillion from loans and advances to customers in the first half of 2023, which ended June 30.
The amount represents a 44.02 percent increase from N708.94 reported by the seven banks in H1 2022.
The banks are Guaranty Trust Holding Company Plc (GTCO), FBN Holdings Plc, Ecobank Transnational Incorporated (ETI), FCMB Group Plc, Fidelity Bank Plc, Sterling Financial Holdings Company Plc and Wema Bank Plc.
The seven banks declared N21.3 trillion in loans to customers as of June 30, 2023, up from N15.32 trillion reported in the 2022 financial year.
Equally, the MPR has increased by 5.5 percentage points Year-on-Year (Yoy) from 13 percent in June 2022 to 18.5 percent in June 2023 and the Monetary Policy Committee (MPC) of the CBN had further increased MPR to 18.75 percent in a move to tackle the rising inflation rate.
With the increase in MPR, the average lending rate in the banking sector increased to 28.94 percent as of June 2023 from 27.61 reported in June 2022 and this helped the banks to generate N1.02 trillion from the loans advanced to the economy in the period.
The breakdown of N1.02 trillion interest on loans and advances to customers showed that FBN Holdings generated the highest in the period, reporting N254.99 billion in interest on loans and advances from customers in H1 2023. It represents a growth of 53.3 percent from N166.32 billion in H1 2022.
The Chief Executive Officer, of FirstBank, Adesola Adeduntan attributed the haul to the bank’s strategy in a statement that said, “While the uncertainties in the macroeconomic and operating environment persist, I am confident that our purpose-driven strategy remains the right one and that our strong financial performance, alongside our business model and resilient portfolios, position the Group well to continue to provide the required support to our customers as well as create robust and sustainable value to our shareholders.”
ETI trailed and generated N246 billion in interest from loans and advances to customers in H1 2023, an increase of 46 percent from N168.72 billion in H1 2022 while GTCO generated N129.8 billion in interest from customers in H1 2023, an increase of 26 percent from N103.3 billion reported in H1 2022.
GTCO in a statement said, “Increase in interest rates in response to rising Inflationary pressures impacted interest paid on savings accounts and time deposits, leading to an increase in the cost of funds from 0.99 percent in H1 2022 to 1.43 percent in H1 2023.”
Fidelity Bank reported N164.04 billion loans and advances from customers in H1 2023, an increase of 56 percent from N104.84 billion in H1 2022, as Sterling Financial Holdings Company declared N58.18 billion in interest on loan advances to customers in H1 2023, 23 percent from N47.04 billion in H1 2022.
FCMB Group declared N114.41 billion in interest on loans and advances from customers in H1 2023, a 45.3 percent growth from N78.75 billion reported in H1 2022. The Group grew its loan book by 37 percent YoY to N1.5 trillion with loans to the Manufacturing, Agriculture, and Oil & Gas sectors contributing the highest to loan book growth.
FCMB Group had leveraged digital lending to increase its loans in the period and boost its profit, according to its Chief Financial Officer, Deji Fayose who, during the group’s investors’ presentation said that N22.6 billion was generated from digital payments, lending activities, and wealth management in H1 2023, a 31 percent growth from H1 2022.
According to him, digital revenues accounted for nine percent of gross earnings for H1 2023 driven by lending and payments. He disclosed that over N123 billion was disbursed to 771,622 customers as of H1 2023, stressing that digital lending now accounts for 65 percent of digital revenues.
Wema Bank brought the rear, reaping N53.5 billion in interest on loans and advances to customers in H1 2023, a growth of 34 percent from N39.97 billion in H1 2022.
