Q1’23: Big banks grow loan books by 18% amid rising interest rate

Nigeria’s largest lenders banks have seen regular development in buyer loans within the first quarter of 2023, BusinessDay’s findings have proven.

The newest earnings report exhibits all the most important lenders grew their risk-weighted belongings, as non-interest sources of revenue additionally bolstered income.

The mixed loans and advances of ten banks rose by 18 p.c to N25.3 trillion within the first quarter of 2023 from N21.5 trillion within the corresponding interval of 2022, based on knowledge gathered by BusinessDay.

“The implication of borrowing on the present rate of interest is detrimental from an curiosity expense standpoint and it additionally has some influence on the Nigerian economic system as a result of the high-interest fee atmosphere will result in passing the fee improve to shoppers,” stated Tajudeen Ibrahim, director of analysis and technique at ChapelHill Denham.

The banks surveyed are Ecobank, Entry Financial institution, Zenith Financial institution, United Financial institution for Africa, Constancy Financial institution, Warranty Belief Holding Firm (GTCO), Stanbic IBTC Holdings, First Metropolis Monument Financial institution (FCMB), Union Financial institution and Wema Financial institution.

“Because of rising rates of interest, companies cross the excessive price of borrowing on to their shoppers which is partly what’s fuelling inflation,” Ibrahim stated.

The Central Financial institution of Nigeria (CBN) elevated rate of interest three extra instances final yr from the primary time in Could 2022 by a complete of 400 foundation factors to 17 p.c and twice this yr to 17.5 p.c and most not too long ago 18 p.c.

In response to CBN, the hike in rate of interest for the primary time in Could 2022 after six years was to combat the bullish inflation for ten straight months final yr and this yr a 3rd consecutive improve.

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“Clearly, the rise in rate of interest has widened the journey farther away from the popular single-digit rate of interest regime. It’s going to spur upward overview of present lending charges which is able to drive prices Northward, leading to larger costs of products, low gross sales and large quantity of stock of unsold merchandise,” Segun Ajayi-Kadir, director-general, Producers Affiliation of Nigeria.

To him, the manufacturing sector is visibly struggling to outlive quite a few strangulating fiscal and financial coverage measures and reforms.

The DG stated producers have been hopeful that the stringent conditionalities for accessing accessible improvement funding home windows with the CBN could be relaxed to enhance the circulation of long-term loans to the manufacturing sector at single-digit rates of interest.

Ecobank gave the sum of N5.04 trillion in loans to clients which amounted to N5.04 trillion within the first quarter of 2023, a 30 p.c improve from N3.87 trillion within the first quarter of 2022.

Entry Financial institution’s loans to clients additionally stood at N5.04 trillion within the first quarter of 2023, a 17.5 p.c improve from N4.29 trillion within the first quarter of 2022.

Zenith Financial institution reported N3.55 trillion as mortgage to clients within the first quarter of 2023, 12 p.c decline from N4.03 trillion in the same interval of 2022.

United Financial institution for Africa loans to clients rose to N3.30 trillion within the first quarter of 2023, 15 p.c improve from N2.87 trillion in the identical interval of 2022.

Constancy Financial institution recorded 18 p.c development in loans to clients which amounted to N2.16 trillion within the first quarter of 2023 from N1.83 trillion within the first quarter of 2022.

Warranty Belief Holding Firm rose to N1.86 trillion within the first quarter of 2023, 8 p.c improve from N1.72 trillion within the first quarter of 2022.

Stanbic IBTC Holdings’ mortgage to clients rose to N1.20 trillion, 22.4 p.c from N0.98 trillion within the reviewed interval.

First Metropolis Monument Financial institution recorded an 8.2 p.c improve in mortgage to clients to N1.19 trillion within the first quarter of 2022 from N1.10 trillion within the first quarter of 2021.

Union Financial institution’s mortgage to clients grew 15 p.c to N982 billion within the first quarter of 2023 from N853 billion within the first quarter of 2022.

Wema Financial institution’s mortgage to clients elevated by 21 p.c to N524 billion within the first quarter of 2023 from N434 billion within the first quarter of 2022.