…Says Nigeria’s external reserves now $43bn …
Banks service customers accounts with N555bn in 9 months The Central Bank of Nigeria (CBN) has lamented over the non-performing of the N500 billion made available to support export activity and boost export business, so as to help in generating export earnings into the country.
This is even as the nation’s external reserves grew significantly from $23 billion in October 2016 to over $43 billion as of December 3, 2018. The Governor of the apex bank, Mr. Godwin Emefiele, disclosed this over the weekend at the 10th Annual Bankers’ Committee retreat held in Lagos, where he explained that some of the export companies need to talk about their challenges, hence the reason a committee was set up to look into the issue.
He noted that by this time, that the Bankers’ Committee are determined that they will get the support they need, saying “we will make it easy for them to access the credit and will put in place policies that will reinvent the export earnings in a way that funds come in and are used in a way that is beneficial to the economy.”
Speaking spherically, he said that given the recent economic volatility and critical development, in the Nigerian financial system, that it is essential to renew focus on non-oil export that helps to catalyse economic growth and eliminate over-dependence on crude oil as a major source of foreign exchange earner. Emefiele, who also double as the Chairman, Bankers’ Committee, added that there are challenges around and ethnogenous factors are happening in a different part of the world, which could ultimately constrain the capacity of the country to generate export revenue, particularly for crude oil.
According to him, “there is a need for us to begin to think about how to diversify our source of revenue earning through a non-oil sector of the economy”. “When somebody conducts export activities, naturally what happen is that he earns foreign exchange, when the foreign exchange repatriated back into the country, it helps to fuel the economic activities by paying for foreign exchange need either for import or sometimes we find out that this foreign exchange bought into the reserves and it also help to boost nation reserves.
“The major focus is that there is a major critical aspect of the economy that requires banking support. We the experts at the banking sector need to come together to put strategies in place that will help create access or making it easy for people to access credit from the banks where it does require credit, enable it to know what are some of the challenges that these companies faced.
What can we do as a banking industry or as a member of the banking community to assist them to overcome some of the challenges they faced that will make it easy for them to conduct their export business and also generate export earning that will be used to run the Nigeria economy.” He, however, added that there is a need to set up a committee headed by a bank CEO, which will take a deep dive into some of the issues and challenges that are faced by exporters and report back the Bankers’ Committee meeting in February 2019, to raise some of the issues.
Meanwhile, a whopping N555 billion was spent by 11 listed commercial banks operating in the country to service their customers’ current, savings and time deposits in nine months ended September 30, 2018, against N468 billion recorded during the correspondent period in 2017, checks by The Daily Times revealed. For the period under review, considered banks reported an increase in Deposits from customers, even as the Zenith Bank Plc reported 57 per cent drop on interest expenses paid on customers’ deposits, attributable to low yield on government securities while the remaining 10 banks reported an increase.
Zenith Bank reported N54.05 billion interest expenses incurred on customers deposit in nine months of 2018 as against N127.01 billion reported in nine months of 2017. Findings by our correspondent revealed that other Tier-1 banks reported double-digit growth on interest expenses on customers deposit while most of the Tier-2 banks reported a marginal increase. For instance, United Bank for Africa Plc (UBA) reported 44 per cent increase on interest expenses on customers deposit to N79.11 billion in nine months of 2018 from N54.88 billion reported in nine months of 2017. Guaranty Trust Bank Plc (GTBank) reported N53.9 billion interest expenses on customers deposit from N44.14 billion reported in nine months of 2018 while FBN Holdings reported 19 per cent increase on interest expenses paid on servicing customers deposit to N83.04 billion from N69.89 billion reported in nine months of 2018.
Another Tier-1 bank, Ecobank Transnational Incorporated (ETI) reported N86.5 billion on interest expenses on customers deposit, 16 per cent above N74.56 billion reported in nine months of 2017. Also, Access Bank Plc reported N94.74 billion on interest expenses on customers deposit in nine months of 2018 from N79.9 billion reported in nine months of 2017.
However, Diamond Bank, a strong Tier-2 banks reported 42 per cent increase on interest expenses on customers deposit to N28.2 billion from N19.88 billion while Wema Bank’s interest expenses on customers deposit moved from N18.9 billion to N20.25 billion. Union Bank’s expenses on customers deposit closed nine months of 2018 at N35.23 billion from N32.8 billion in nine months of 2017. Furthermore, Fidelity Bank Plc reported one per cent increase on interest expenses on customers deposit to N45.4 billion from N44.88 billion while FCMB Group Plc announced two per cent on interest expenses on customers deposit from N28.94 billion in nine months of 2018 to N28.44 billion reported in nine months of 2017.
Analysts at Investment One expressed that, “Going into H2 2018, we are of the opinion that loan growth would come in muted as we expect a slight uptick in fixed income yields, which would further shift the focus of banks from expanding their loan books to investing more in fixed income securities so as to limit their exposure to credit risk even amidst a potential uptick in system liquidity as electioneering comes into play.” Finance experts attributed the growth to payment on fixed deposit expenses of customers.
Managing director, Highcap Securities Limited, Mr. David Adnori, said: “Most of the Tier- 1 banks that borrowed foreign loans had to pay interest and it affected their interest expenses. Besides, drop in the foreign exchange market also increased their interest expenses generally. “In a move to encourage deposit, banks increased interest expenses on fixed deposit to attract customers and boost their working capital,” he added.
Also commenting, Managing Director, Cowry Assets Management Plc, Mr. Johnson Chukwu, said the Central Bank of Nigeria (CBN) and Federal Government borrowing interest on T-Bills continued to attract investors interest, forcing banks to respond with increased interest on deposit to sustain liquidity position. Motolani Oseni.
