10 Banks Generate N12.24tn Interest Income from Loans, Others in Nine Months

Kayode Tokede

Following the frequent hike in the Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN), a total of 10 Deposit Money Banks (DMBs) generated an estimated N12.24 trillion in interest income from loans and advances to customers, banks, and investment in federal government’s securities in the first nine months of 2024.
The 2024 figure of N12.24 trillion interest income, according to extracts from the unaudited nine months results (January to September) posted on the Nigerian Exchange Limited (NGX), translates into a 148 per cent increase when compared with the N4.9 trillion generated in nine months of 2023.

The 10 DMBs are Access Holdings Plc, Guaranty Trust Holding Company Plc (GTCO), Zenith Bank Plc, United Bank for Africa (UBA) Plc, Ecobank Transnational Incorporated (ETI), and FBN Holdings Plc.
Others are Fidelity Bank Plc, Wema Bank Plc, Stanbic IBTC Holdings Plc and Sterling Financial Holdings Company Plc.  
These DMBs have continued to benefit from the high-yield operating environment as monetary authorities in countries in key African economies have sustained a tight monetary stance to address stubbornly high inflation.
Across Sub-Saharan Africa, inflation has slowed significantly from prior year highs.
The MPR hikes are part of a strategy to address inflation and economic challenges.
The CBN has increased the MPR five times in 2024.

In February, the MPR was raised by 400 basis points from 18.75 per cent to 22.75 per cent and in March, it was raised by 200 basis points from 22.75 per cent to 24.75 per cent.
In May, it was raised by 150 basis points from 24.75 per cent to 26.25 per cent, while the rate was raised by 50 basis points from 26.75 per cent to 27.25 per cent in July.
The latest increase was in September when the MPR was raised by 50 basis points from 26.75 per cent to 27.25 per cent and it has impacted loans to customers and yield on government securities such as FGN Bond and Nigerian Treasury Bills (NTB).

The average yield on NTBs inched higher through nine months of 2024 driven by the CBN’s policy measures to curb inflation and mop up excess liquidity.
According to THISDAY investigations, Access Holdings led other DMBs with the highest interest income from loans and advances to customers in the period under review, followed by Zenith Bank, ETI, UBA, and FBN Holdings.
In the nine months of 2024, Access Holdings announced N2.4 trillion interest income, an increase of 129 per cent from N1.05 trillion in nine months of 2023, while Zenith Bank declared N1.94 trillion interest income in nine months of 2024, a growth of 161.7 per cent from the N671 billion reported in nine months of 2023.

From the unaudited result and accounts for nine months of 2024, ETI posted N1.93billion interest income, representing 140 per cent growth from N805.1 billion in nine months of 2023, as UBA announced N1.8 trillion interest income in nine months of 2024, about 170 per cent from N666.3 billion reported in nine months of 2023.
FBN Holdings announced N1.63 trillion interest income in nine months of 2024, up by 164 per cent from the N617.1 billion recorded in the first nine months of 2023.
Following the increase in the MPR or interest rate from 18.75per cent to 27.25 per cent, the banking sector average maximum lending rate rose to 30.21 per cent in September 2024, the highest since 2022.
Maximum lending rate refers to the rate charged by commercial banks for lending to customers with low credit ratings.

The unanticipated rise in MPR has impacted the banking sector lending rate as the CBN sustained pressure in tackling inflationary pressure.
This unprecedented move has not only set the MPR at its highest level to date but also reflects the CBN’s determined effort to address the persistent economic pressures.
The decision was backed by the International Monetary Fund (IMF), which commended the MPC’s resolve to tighten monetary policy further by increasing the policy rate to 27.25 per cent.

Analysts have attributed the increase in lending to the hike in MPR and severe macroeconomic challenges.
The recent announcement, made by CBN Governor, Dr. Yemi Cardoso, had highlighted the central bank’s proactive approach towards monetary tightening amidst challenging economic conditions.