Tough operating environment notwithstanding, 13 commercial banks have generated N1.59 trillion interest income on loans and advances to their customers in nine months of 2017.
The banks within the period intensified their resolve at growing interest income from loans granted to customers in a recessed economy.
The Central Bank of Nigeria (CBN) interest rate in 2017 has remained at 14 per cent while commercial banks average prime lending rate on key sectors stood at 17.69 per cent and a maximum lending rate at 31.2 per cent as at August.
The 13 banks in nine months ended 30 September 2016 recorded N1.36 trillion interest incomes on loans and advances to customers, InsideBusiness Online has gathered.
Financial experts are uncomfortable with these figures as some banks’ loans and advances to customers have dropped, yet interest incomes continue to grow extensively.
The Chief Finance Officer, Wema Bank plc, Mr Tunde Mabawonku, says interest rates increased generally across the banking sector and in some instances are due to higher loan volumes generated by banks to customers.
The Managing Director, MD/CEO Enterprise Stockbrokers plc, Mr Rotimi Fakayejo, attributes the growth to customers’ responsiveness to the Treasury Bill (T-Bill), which interest is considered attractive.
“Since the interest rate on T-bill is on the increase, the interest rate of banks lending to customers will definitely go higher,” Mr Fakayejo said.
The CBN increased the interest rate to 14 per cent to complement the adoption of the flexible foreign exchange policy framework. The hike was to stem inflation rates and provide for positive real returns on investment in order to attract foreign investors.
The CBN policy saw the commercial banks increasing the average maximum lending rates above 30 per cent. A Tier-1 bank, Zenith Bank plc, generated the highest interest income, followed by Eco Transnational Incorporated (ETI) while Wema Bank, a Tier-2 bank, raked the lowest interest income by September.
For the period under review, Zenith Bank’s interest income moved to N241 billion, an increase of 15.6 per cent, from N208.44 billion in nine months of 2016.
ETI generated N230.1 billion interest income, 6.6 per cent higher than N215.8 billion reported January to September 2016, while First Bank of Nigeria Holdings plc reported an increase of 15.5 per cent interest income to N222.9 billion from N193 billion.
Access Bank plc and Guaranty Trust Bank grew such incomes by 27.1 per cent and 9.3 per cent from N145 billion and N140 billion to N184.8 billion and N153.7 billion in nine monthsended 30 September 2017, respectively.
With loans and advances to customers gaining 6.8 per cent year-on-year to N377 billion as at 30 September 2017, United Bank for Africa plc interest income stood at N145 billion from N107.56 billion on 30 September 2016.
Diamond Bank plc, Fidelity Bank plc, Union Bank of Nigeria plc, Sterling Bank plc, Unity Bank plc, Stanbic IBTC Holdings plc and Wema Bank plc posted their figures, too.
Diamond Bank reported an N85 billion interest income in nine months ended 30 September 2017 from N73 billion in nine months ended 30 September 2016.Fidelity Bank gained 22 per cent to N78.7 billion from N64.5 billion in nine months of 2016.
InsideBusiness Online gathers that Union Bank of Nigeria moved to N64.7 billion in nine months of 2017 from N51.2 billion (same period) in 2016.
Sterling Bank and Unity Bank stood at N58 billion and N50.5 billion from N51.3 billion and N44.8 billion in nine months ended 30 September 2016, respectively.
Stanbic IBTC gained 8.8 per cent to N44.5 billion from N40.9 billion, while Wema Bank generated N31.7 billion in the period under review.
Stakeholders are divided over the higher-than- expected results, citing CBN’s tight monetary policy. Some of them state that it does not make any economic sense in a country that is battling with high bank interest rates.