Nigeria’s five most sensible banks, also known as FUGAZ, generated N740. 88 billion in interest as a source of revenue in the third quarter of 2022. This represents an increase of 35. 9% over the N545. 21 billion recorded in the comparable era of 2021.
That’s according to a study through Nairalytics, the research arm of Nairametrics, information extracted from banks’ financial statements, as reported on the Nigerian Stock Exchange (NGX) website.
The source of interest income is the source of income obtained through banks by lending cash to other entities. They are the main source of income for the country’s monetary institutions. On average, the source of interest income accounts for more than a portion of the total source. of revenues generated through Nigerian banks.
The impressive expansion of turnover recorded through banks follows the resolution of the CBN to the benchmark interest rate in an attempt to involve the inflation rate, which has reached a record level.
The CBN raised the official interest rate (MPR) in May and July to 13% and 14% respectively. This was considered mandatory after the emergence of the property charge and in the country. Therefore, a warmongering resolution through the NBC aimed to build the charge of loans to companies to absorb liquidity.
During periods of higher interest rates, banks revel in an improvement in the source of income from their lending activities, which constitute a vital component of their basket of revenue sources. As a result, banks qualify consumers more to offload credit from them when the bank umbrella adopts an aggressive financial policy.
Banks experienced a decline in the source of interest income in 2020, following the covid-19 pandemic and the low interest rate regime followed through the CBN to stimulate economic growth, which has now been reversed through the CBN’s recent adjustment policy.
While the source of banks’ interest income depends on the CBN’s monetary policy rate (MPR), it also depends on the type and number of bank consumers. In general, banks with more corporate consumers tend to earn a higher source of interest income than retail banks.
Meanwhile, the CBN also increased the minimum tradable interest rate on local currency savings deposits from 10% to 30% of the MPR. This implies that banks also incurred higher interest rates for savings deposit accounts in the era under review.
A more detailed breakdown showed that the five banks incurred a total of N289. 18 billion in interest rates during the period under review, 40 cents more than the N206. 52 billion spent last year. However, banks were able to account for N451. 7 billion as a source of net interest income for the same consistent period.
Banks are expected to print higher figures in the fourth quarter of the year, after the CBN raised the benchmark interest rate for the third consecutive time in September 2022 to 15. 5%, the rate in 20 years.
Below is the breakdown of the interest income source for Tier 1 banks in the third quarter of 2022:
Subscribe to our newsletter
Subscribe to our mailing list to get updates straight to your inbox!
Follow the money Follow the market Follow the Crypto on the go offers
Business News| | Scholarship Money Market | Cryptos | Financial education| SMEs |
© 2022 Nairametrics
His GPS responded. Make sure your GPS is enabled and check again.