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Banking

Eight banks incur N112 billion in AMCON expenses in Q1

Olamide Ologunagbe May 27, 2023

Eight publicly listed commercial banks in Nigeria incurred N112.15 billion in banking sector resolution costs to the Asset Management Corporation...

JP Morgan sees N850/$ exchange rate by year-end

JPMorgan: the bank that never lets a crisis go to waste

BusinessDay May 06, 2023

Chief executive Jamie Dimon has presented the takeover of First Republic as a public service. But critics claim the system...

Stanbic IBTC Bank turns disciplined saving into unforgettable experiences

Stanbic IBTC promotes savings culture with cash rewards for customers

Hope Moses-Ashike Apr 26, 2023

Stanbic IBTC Bank has reiterated its commitment to promoting a savings culture as it has given out N126 million in...

We exclusively focus on SME lending – Auto Bucks CEO Olasukanmi Olaoye CEO, Auto Bucks Lenders Limited, one of the subsidiaries of Alert Group, in this interview with Hope Moses-Ashike, speaks on challenges facing lending to Small and Medium Enterprises (SMEs) and other issues, excerpt. What specific risk management strategy did you implement to maintain portfolio at risk below 1 percent? In our inaugural year of operation, we disbursed over N80 million in loans. The income generated from these disbursements, coupled with the fact that they constitute a healthy portfolio, mitigates any risk associated with our portfolio. Therefore, the revenue derived from fees and charges enables us to generate income without exposing our portfolio to risk. The robust health of these portfolios significantly contributes to the achievement of our income targets. How did you manage costs and operational efficiency to achieve profitability within seven months? To achieve profitability within seven months, we implemented several strategies. Firstly, we focused on securing cheaper funds, as lower financing costs enhance operational efficiency significantly. Secondly, while maintaining competitive pricing, we ensured that our rates were adequate to cover our cost of funds and other operational expenses. Moreover, we kept our management expenses minimal, contributing to overall cost reduction. Leveraging technology was another key aspect of our approach. By deploying advanced technological solutions, we streamlined various business processes. For instance, our electronic collection system eliminated the need for manual cash transactions, enhancing efficiency and reducing the need for field officers. Through these measures, we optimized operational efficiency and effectively managed costs, resulting in positive outcomes within the initial six months of operation. You mentioned disbursing approximately N80 million; how many individuals or businesses were beneficiaries of this loan? We exclusively focus on SME lending. To date, we have successfully disbursed loans to over 1,000 SMEs. This achievement underscores our deliberate commitment to positively impact the Nigerian economy through targeted support for SMEs. Since our inception, every loan disbursed has been directed towards SMEs, reaching a total of over 1,000 beneficiaries. How do you ensure that the beneficiaries are utilizing the loans provided to them for business growth and to contribute to the economy? The primary way we ascertain the proper utilization of the funds we disburse is through their repayment behavior. If beneficiaries have diverted the funds and not invested them in their businesses, it would reflect in their repayment patterns. Additionally, we implement rigorous monitoring mechanisms once the loan is disbursed. This ongoing monitoring allows us to assess the impact of the funds on their businesses and on the economy as a whole. Furthermore, maintaining a positive credit appraisal is crucial. A strong credit record not only facilitates future loan requests but also enables beneficiaries to potentially access larger loan amounts. Therefore, we emphasize the importance of maintaining a favorable credit history. When you mention that your portfolio at risk is below 1 percent, does that imply that you do not encounter other challenges? The strategy we’ve employed acknowledges that some clients may face difficulties in repayment, particularly during certain business cycles such as festive or fasting periods. For instance, clients in the fast-moving consumer goods (FMCG) sector may experience reduced returns during fasting periods due to decreased consumption levels. Our proactive monitoring of these clients helps mitigate potential challenges and aids in the recovery of funds. As previously mentioned, we exclusively provide loans to SMEs with a minimum of 12 months of consistent business operation and cash flow. This ensures that our borrowers have a track record of financial stability, as evidenced by their bank records. We do not extend loans to startups but rather focus on established businesses with a proven track record. Our credit analysis process is thorough and detailed, assessing the borrower’s financial history and ability to repay. For instance, if a borrower has transacted less than N500 million in the past 12 months and seeks a N5 million loan, we evaluate their monthly turnover to ascertain their repayment capacity. This rigorous process ensures that loans are utilized effectively and that borrowers can comfortably meet repayment obligations. Additionally, we implement regular monitoring to ensure that funds are used appropriately and not diverted for non-business purposes. We are mindful of seasonal factors, such as festive periods, to prevent misallocation of funds. Our commitment to responsible lending practices and diligent monitoring safeguards against potential diversions and ensures that our support truly benefits the MSMEs we serve. What are some of the other challenges your business faces? In the current macroeconomic landscape, businesses encounter various hurdles. The high cost of operation is a prominent issue, compounded by volatile market conditions. Fluctuations in prices, especially due to foreign exchange (FX) challenges, pose significant obstacles. Even after procuring goods, market dynamics can swiftly impact prices, leading to uncertainties. Moreover, macroeconomic indicators like inflation rates, currently at 33.2 percent, further complicate business operations. Elevated inflation affects purchasing power and overall business viability. Additionally, the cost of funds presents a considerable challenge. While securing financing is crucial, prevailing market conditions have increased the cost of capital, with investors demanding higher returns on their investments. Despite these challenges, we actively seek solutions to mitigate risks. This includes sourcing affordable and stable funding options while prioritizing long-term relationships with fund providers. We also recognize the importance of stable economic policies in fostering a conducive business environment. Efforts by the federal government and the Central Bank of Nigeria to stabilize the economy, particularly in areas like FX markets, are crucial for SMEs to plan and navigate business operations effectively.

CIBN proposed banking school to offer job opportunities

Hope Moses-Ashike Apr 26, 2023

The Chartered Institute of Bankers of Nigeria (CIBN), is making plans to establish a banking school, which would offer job...

What customers can do to reclaim their money in dormant account

Hope Moses-Ashike Apr 26, 2023

The Central Bank of Nigeria (CBN) recently released an exposure draft on ‘the Management of Dormant Accounts, Unclaimed Balances and...

Fed review pins blame for SVB failure on Trump-era rule changes

Silicon Valley Bank collapse, lessons for Nigerian regulators – NDIC

Hope Moses-Ashike Apr 21, 2023

The collapse of Silicon Valley Bank, Signature Bank and Credit Suisse provides valuable lessons for regulators/ supervisors and bank executives...

Raven Bank records 500,000 users in 2yrs

Eniola Olatunji Apr 17, 2023

Raven Bank, a fintech company has recorded about 500, 000 customers in its two years by bridging the gap between...

CBN’s aggressive liquidity mop-up eases inflation

Banks' deposits with CBN drop 95.82% on naira redesign

Hope Moses-Ashike Apr 06, 2023

Commercial banks’ deposits with the Central Bank of Nigeria (CBN), known as Standing Deposit Facility (SDF), has dropped by 95.82...

Need to adopt e-payment channels as cashless policy comes to stay

Hope Moses-Ashike Apr 03, 2023

The era of going to the banking hall to withdraw up to N2 million over the counter has become a...

Explainer: Should CBN determine bank directors' tenure?

Hope Moses-Ashike Mar 12, 2023

The Central Bank of Nigeria (CBN) recently reviewed the tenure of executive management and non-executive directors of deposit money banks...

Jeremy Awori assumes office as Ecobank Group new CEO

Hope Moses-Ashike Mar 03, 2023

Ecobank Transnational Incorporated (ETI), the parent company of the Ecobank Group, the leading pan-African banking group, on Thursday announced that...

The CBN governor wields enormous power without accountability

CBN to issue N1.14trn treasury bills in Q2

Hope Moses-Ashike Mar 02, 2023

The Central Bank Nigeria (CBN) will issue a total of N1.14 trillion treasury bills in the second quarter of 2023...

CBN's tenure rule: Bank MDs to retire in 2 years

Hope Moses-Ashike Mar 01, 2023

The new tenure rule by the Central Bank of Nigeria (CBN) has revealed three banks’ chief executive officers who will...

Banks net domestic credit rises 37.57% in one year

Hope Moses-Ashike Feb 23, 2023

Nigerian banks Net Domestic Credit (NDC), consisting of loans to the private sector and the government, has maintained a steady...

Sterling Holdco eyes N121.8bn earnings in Q1 2025

Customers can access N20m in Sterling Bank, Credit Café partnership

Hope Moses-Ashike Feb 23, 2023

Under a recent partnership between Sterling Bank Plc and Credit Café Africa, a digital lending platform, customers can get a...

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How Zenith Bank, GTCO outpaced peers in race for liquid assets

Polaris Bank outlines steps for converting dollars to naira

Cheaper funds for firms as interbank rate falls sharply

Hope Bank commences second edition of wallet promo

Amazon’s rebuttal of allegations of “technical glitches” and its likely impact on the 2023 presidential election results: what you need to know

Banking

Eight banks incur N112 billion in AMCON expenses in Q1

JPMorgan: the bank that never lets a crisis go to waste

Stanbic IBTC promotes savings culture with cash rewards for customers

CIBN proposed banking school to offer job opportunities

What customers can do to reclaim their money in dormant account

Silicon Valley Bank collapse, lessons for Nigerian regulators – NDIC

Raven Bank records 500,000 users in 2yrs

Banks' deposits with CBN drop 95.82% on naira redesign

Need to adopt e-payment channels as cashless policy comes to stay

Explainer: Should CBN determine bank directors' tenure?

Jeremy Awori assumes office as Ecobank Group new CEO

CBN to issue N1.14trn treasury bills in Q2

CBN's tenure rule: Bank MDs to retire in 2 years

Banks net domestic credit rises 37.57% in one year

Customers can access N20m in Sterling Bank, Credit Café partnership

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