Nigerian banks attract $3.8bn capital inflows on returns

Out of 23 sectors, the Nigerian banking sector recorded the highest capital inflows of $3.8 billion in nine months of 2024, representing a 28 percent increase of $832.64 million at the end of 2023.

This is driven by rising foreign exchange conversions and investment yields.

The National Bureau of Statistics (NBS) Capital Importation Report for Q3 2024 revealed that the financial sector recorded the second highest capital inflow, $294.55 million, followed by the production/manufacturing sector, $189.22 million.

“Total capital importation of the banking sector declined by 65 percent to $579.48 million in Q3 2024 compared to $1.12 billion in Q2 2024 and $2.07 billion in Q1 2024,” the report shows.

Capital Importation is the inflow of foreign capital such as foreign direct investment (FDI), foreign portfolio investment (FPI), and foreign loans into the country.

The NBS data suggests that foreign investors prefer to invest in securities such as treasury bills and bonds from countries with foreign ownership and import capital through banks affiliated with foreign investment.

“Capital Importation in Q3 2024 originated largely from the United Kingdom with $502.60 million, showing 40.12 percent of the total capital imported, followed by the Republic of South Africa with $185.03 million (14.77%) and the United States with $163.86 million (13.08%),” NBS shows.

However, Nigeria attracted a total of $7.2 billion in capital imports in nine months of 2024 compared to $2.8 billion in the same period of 2023, driven by the constant rise in monetary policies by the Central Bank of Nigeria, which are seen improving the investment securities of Nigerian banks.

Nigeria’s monetary policy rate (MPR) stands at 27.5 percent, following the most recent adjustment in November 2024.

Data from FMDQ Securities Exchange Limited revealed that the quoted naira stood at N1,533/$ at the Nigerian Autonomous Foreign Exchange Market (NAFEM) as of December 23, 2024. However, the naira appreciated to N1,515/$ in the parallel market on December 6, 2024, as traders offloaded dollars in response to the CBN’s new forex framework, before losing a five-day winning streak on Monday.

This rise amid inflationary pressures and a volatile exchange rate environment has increased the interest rates of banks, bringing more investment yields in nine months of 2024.

Further analysis of the NBS report shows that Standard Chartered Bank Nigeria Limited received the highest capital importation into Nigeria in Q3 2024 with $385.62 million, followed by Stanbic IBTC Bank Plc with $382.08 million and Citibank Nigeria Limited with $192.88 million.

Analysis of individual banks

Stanbic IBTC

Stanbic IBTC recorded the highest capital inflow of $2 billion in nine months of 2024, representing a 28.3 percent increase from $919 million at the end of 2023. In Q1, the bank’s capital importation stood at $1.3 billion but declined to $409.9 million in Q2 and dropped further to $382 million in Q3 2024.

Citibank Nigeria

Citibank attracted about $1.5 billion in capital importation in nine months of 2024, representing a 21.6 percent rise from $1 billion at the end of 2023. In the first quarter, Citibank attracted a $547.7 million capital inflow, rising to $818.5 billion in the second quarter and $192.9 billion in Q3 2024.

Standard Chartered Bank of Nigeria

Standard Chartered’s total capital importation for nine months of 2024 surged by 21.6 percent to $1.4 billion from $384 million at the end of 2023. In Q1 2024, the banks attracted $399.4 million, increasing to $654.8 million in the second quarter and $385.6 million in Q3 2024.

Rand Merchant Bank

Rand Merchant Bank received a 16 percent increase in capital importation of $1.1 billion in nine months of 2024 compared to $263 billion at the end of 2023. In the first quarter, it attracted the highest inflow of $528.7 million but decreased to $488.6 million in the second quarter and stood at $141 million in the third quarter.

Access Bank Plc

Access Bank attracted a $410.13 million capital inflow in nine months of 2024, representing a 392.9 percent surge from $83.2 million at the end of 2023. Access saw its highest inflow of $278.2 million in the first quarter, decreasing to $80.14 million in Q2 and $81.8 million in Q3 2024.