Tier-one banks saw their aggregate loans and advances to consumers increase by 22.39 percent in the first half of 2022, with interest income rising by more than a quarter.
On account of curbing rising inflation, the Central Bank of Nigeria raised the monetary policy rate, the benchmark interest rate, from 11.5 percent to 13 percent in May, 14 percent in July 14 and 15.5 percent in September.
Aggregate loans and advances reported by FBN Holdings Plc, Guaranty Trust Holding Company (GTCO), Access Bank, United Bank for Africa (UBA), and Zenith Bank increased to N16.18 trillion in the first half of 2022 from N13.22 billion in the same period last year.
Commenting on the impact the rate hikes would have on banks, analysts at CSL Stockbrokers Limited said: “Banks should continue to benefit from better yields on their investment securities portfolio and loans.
“Though we expect funding costs to also rise, we believe banks, especially the bigger banks, will see faster growth in yields compared with funding costs as they have a large pool of cheap retail deposits.”
Interest income from loans and advances to customers by these banks appreciated by 25.24 percent in the first half of 2022, contributing significantly to the revenues reported by them.
Aggregate interest income generated from loans to customers in the first half of 2022 amounted to N803.6 billion, up from N641.6 billion in the corresponding period of 2021.
Access Bank reported the highest loans to customers and interest income generated from loans to customers in the first half of 2022.
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Its loans to customers grew by 32.12 percent to N4.73 trillion from N3.58 trillion in the first half of 2021. Interest income generated by the bank increased by 36.98 percent to N238.9 billion from N174.4 billion.
Zenith Bank’s loans and advances to customers rose by 22.89 percent to N3.49 trillion from N2.84 trillion in the first half of 2021. The bank also saw its interest income rise by 20.68 percent to N163.4 billion from N135.4 billion in the first half of 2021.
FBN Holdings grew its loans to customers by 33.07 percent in the first half of 2022 to N3.38 trillion from N2.54 trillion in the corresponding period of 2021. It also generated interest income from its loans to customers amounting to N166.3 billion in the first half of 2022, compared to N122.03 billion in the first half of 2021.
UBA grew its loans to customers by 4.56 percent in the first half of 2022 to N2.75 trillion from N2.63 trillion in the same period last year. It generated interest income amounting to N131.7 billion from loans to customers in the first half of 2022, up 11.23 percent from N118.4 billion in the first half of 2021.
GTCO reported loans to customers totalling N1.83 trillion in the first half of 2022, up 12.27 percent from N1.63 trillion in the same period in 2021. Interest income from loans to customers improved by 12.27 percent to N1.83 billion in the first half of 2022 from N1.63 billion in the first half of 2021.
