Despite the simmering economic situation in the country, five big banks appear to have the hidden key to success as their total assets grew by 55 per cent by the end of the third quarter to a whopping N146 trillion and profits surging by 97 per cent to N3.43 trillion.
This is in spite of the successive hike in benchmark rate by the Central Bank of Nigeia (CBN). It follows that loans must have gone up and interest rates consequently raised by banks.
The financial services group’s increased total assets were driven by loan growth as higher deposits taken raised lending appetite. The Central Bank of Nigeria’s enforcement of cash reserves ratio supported loan growth in the period.
Data collated by MarketForces Africa shows that the five banks loans to customers rose by 44.18 per cent per cent from the beginning of the year to date to settle at N41 trillion. Access Holdings alone accounted for more than 28.7 per cent of the top five banks loan to customers in the period.
GTCO was the lowest lender, accounting for seven per cent of the tier-1 banks loan to customers. Further review showed that loan accounted for 28.23% of the tier-1 banks total assets at the end of the 9M of financial year 2024.
On the earnings side, the top banks grew profit by 97 per cent year on year to N3.43 trillion in the period. The earnings growth experience by the big lenders was driven by interest rate adjustment on loan books to reflect changing market dynamics.
Despite tough economic conditions, local deposit banks have been on the winning side after successive interest rate hikes.
The monetary policy tightening drive was spurred majorly by double digits inflation rate. Interest rate was hiked to 27.25 per cent at the policy meeting despite disinflation.
