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Commercial banks record high loans to customers, reaching N22.9trn in H1 2023



The total loans to customers from seven commercial banks in Nigeria rose to N22.9 trillion in the first half of 2023, the highest in at least six years, analysis of data from their financial statements show.

Their combined customer loans rose by 44.3 per cent from N15.9 trillion in the first half of 2022.

The banks are Guaranty Trust Holding Company (GTCO), Fidelity Bank, Stanbic IBTC Bank, FCMB Group, and United Bank for Africa (UBA), Zenith Bank and FBN Holdings.

A further analysis shows that the banks had an average Loan-to-Deposit Ratio (LDR) of 50.8 per cent. This means that for every N100 deposited, they lent N51.

Their total deposits from customers also increased by 55.1 per cent to N45.3 trillion in H1 from N29.2 trillion the same period of last year.

The Central Bank of Nigeria (CBN) had in 2019 increased banks’ minimum LDR ratio to 65 per cent from 57 per cent. The CBN introduced this requirement in order to encourage banks to lend more money to businesses and individuals, which can help to boost economic growth.

“The justification for the LDR policy is to encourage banks to enhance credit delivery to the real sector of the economy,” CBN said in a report.

LDR is a ratio that measures liquidity by comparing a bank’s total loan credit facilities to its deposit. It is an important measure of a bank’s lending activity.

A high LDR indicates that a bank is lending more of its deposits, which can be a sign of a healthy financial institution. However, a very high LDR can also be a sign of risk, as it means that the bank is more exposed to defaults on loans.

This group had the highest total deposit from customers amounting to N9.04 trillion, up from N6.3 trillion in the same period of 2022.

Its total loans and advances to customers rose to N5.26 trillion from N3.38 trillion. The LDR was 58.2 per cent, up from 53.7 per cent.

GTCO’s total deposit from customers rose to N6.24 trillion from N4.26 trillion.

Its total loans and advances to customers increased to N2.32 trillion from N1.83 trillion.

The LDR was 37.2 per cent, up from 42.9 per cent. The bank’s total deposits from customers increased to N3.18 trillion from N1.91 trillion. Its total loans and advances to customers amounted to N2.65 trillion, up from N2.29 trillion.

The LDR stood at 83.3 per cent, up from 119.9 per cent.

Stanbic IBTC recorded N1.64 trillion in total deposits from customers, up from N1.19 trillion.

Its total loans and advances to customers amounted to N1.66 trillion, up from N1.06 trillion. Its LDR stood at 101.2 per cent, up from 89.1 per cent.

FCMB recorded N2.38 trillion as its total deposit from customers, up from N1.64 trillion. Its loans and advances to customers amounted to N1.54 trillion, up from N1.12 trillion.

Its LDR stood at 64.7 per cent, down from 68.29 per cent.

Zenith recorded N11.1 trillion as its total deposit from customers, up from N7.15 trillion. Its loans and advances rose to N5.1 trillion from N3.5 trillion.

Its LDR stood at 43.4 per cent, up from 48.9 per cent recorded in the same period of 2022.

UBA reported a total deposit from customers of N11.1 trillion, up from N6.73 trillion. Its loans and advances amounted to N4.5 trillion from N2.8 trillion. Its LDR stood at 40.4 per cent, down from 40.8 per cent.

Money market

FBN Holdings’ market capitalisation hits $2.6bn after week of growth



FBN Holdings, one of Nigeria’s oldest banks on Wednesday has achieved a market capitalisation of N1.06 trillion ($2.6 billion) after a week of growth, with the share price rising by around 10 per cent.

The surge began in 2022 after billionaire investor Femi Otedola acquired a majority stake in the bank, triggering investor enthusiasm and a flurry of stock purchases.

At the time of Otedola’s acquisition, FBNH traded at just under N6 per share, meaning the stock price has quadrupled since the announcement.

In its third-quarter financial statements for the period, FBN Holding’s profit after tax (PAT) was N236.4 billion, a 159.2 percent increase from the N91.2 billion recorded in the corresponding period in 2022.

By surpassing the N1 trillion market cap, FBNH joins the exclusive group of Nigerian publicly traded companies known as SWOOTs (Stocks Worth Over One Trillion).

Other members of the SWOOTs group include Dangote Cement, Airtel Africa, MTN, BUA Cement, BUA Foods, Seplat, Zenith Bank, and GTCO.

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Money market

W’ Bank commits $5bn to expand electricity access in Africa by 2030



The World Bank has announced plans to allocate $5 billion towards bringing electricity to 100 million people in Africa by 2030.

The announcement was made by the President of the World Bank, Ajay Banga, during his speech at the mid-term review of the International Development Association’s $93 billion replenishment package in Zanzibar, Tanzania.

Banga highlighted the importance of providing support to low-income countries through the bank’s IDA, which offers zero- or low-interest loans.

He cited the initiative to bring electricity to millions of people in Africa as an example of how the funds from IDA will be used.

The World Bank’s plan to bring electricity to 100 million people in Africa by 2030 is a significant step towards improving the quality of life for millions of people on the continent.

The lack of access to electricity has been a major hindrance to economic development in many African countries, and this initiative will help to address this issue.

The allocation of $5 billion towards this project is a clear indication of the World Bank’s commitment to supporting sustainable development in Africa.

Banga said World Bank shareholders, donor countries and philanthropies needed to dig deeper to help IDA deliver better development outcomes to low-income countries.

He said, “The truth is we are pushing the limits of this important concessional resource and no amount of creative financial engineering will compensate for the fact that we need more.”

He also said the World Bank needs to revamp how it evaluates its performance to focus on improved outcomes, not numbers of projects or dollars disbursed.

That means moving towards platforms that can be replicated, such as an IDA-financed mini-grid that delivers electricity to rural communities in Nigeria.

“But this is just one example, I want to see 100,000 – 200,000 – half a million more,” he said, adding that IDA was investing $5 billion to deliver affordable renewable electricity to 100 million Africans before 2030.

The World Bank boss added, “But how can we hope to make even adequate progress while 600 million people in Africa – 36 million of whom live here in Tanzania – still don’t have access to reliable electricity? Put simply: We can’t.”

The current, 20th IDA funding round is due to be completed on June 30, 2025, with the Zanzibar conference aimed at adding to that funding.

Banga used to launch his campaign for the subsequent round of funding to well exceed $93 billion.

The World Bank President in Zanzibar said, “The truth is we are pushing the limits of this important concessional resource and no amount of creative financial engineering will compensate for the fact that we need more funding. This must drive each of us to make the next replenishment of IDA the largest of all time.”

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Money market

CBN approves reviewed service charter to enhance business facilitation



By Sodiq Adelakun

The Central Bank of Nigeria (CBN) has announced the approval of its reviewed Service Charter by Governor Olayemi Cardoso.

The Service Charter is a requirement of the Business Facilitation Act (BFA) 2022 and aims to improve the ease of doing business in Nigeria.

It also enables the Bank to comply with SERVICOM Nigeria’s directives on improving customer service delivery.

The Charter outlines the Bank’s promises to work with its external customers to meet their service expectations, as well as what the Bank expects from them.

In the foreword, the Governor reiterated the Bank’s “commitment to providing more responsive and citizen-friendly governance through quality service delivery that is efficient, accountable and transparent,” the CBN stated on its website.

The document outlines the Bank’s mandates, vision, mission, and core values. It contains the services the Bank offers through its various departments and the service standards for each service.

The Service Charter also includes a standardised customer complaints form for reporting service failure and a mechanism for addressing service failure in any of the Bank’s services.

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