Tier 1 banks increase customer lending by 22%
Tier 1 banks saw their cumulative loans and advances to consumers increase by 22.39% in the first half of 2022, with interest income increasing by more than a quarter.
Due to the fight against rising inflation, the Central Bank of Nigeria raised the monetary policy rate, the reference interest rate, from 11.5% to 13% in May, 14% in July 14 and 15.5% in September.
Total loans and advances reported by FBN Holdings Plc, Guaranty Trust Holding Company (GTCO), Access Bank, United Bank for Africa (UBA) and Zenith Bank rose to 16.18 trillion naira in the first half of 2022 from 13, 22 billion naira in the same period last year.
Commenting on the impact rate hikes would have on banks, analysts at CSL Stockbrokers Limited said: “Banks should continue to enjoy better returns on their investment securities portfolio and loans.
“While we expect funding costs to rise as well, we believe that banks, especially larger banks, will see faster growth in returns relative to funding costs, as they have a large cheap retail deposit pool.”
Interest income on loans and advances to customers of these banks appreciated by 25.24% in the first half of 2022, contributing significantly to the income reported by these banks.
Total interest income generated from loans to customers in the first half of 2022 amounted to N803.6 billion, compared to N641.6 billion in the corresponding period of 2021.
Access Bank reported the highest customer loans and interest income generated from customer loans in the first half of 2022.
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Its loans to customers increased by 32.12% to N4.73 trillion from N3.58 trillion in the first half of 2021. Interest income generated by the bank increased by 36.98% to N238.9. billion naira against 174.4 billion naira.
Zenith Bank’s loans and advances to customers increased by 22.89% to N3.49 trillion from N2.84 trillion in the first half of 2021. The bank also saw its interest income increase by 20.68% to reach N163.4 billion from N135.4 billion in the first half of 2021.
FBN Holdings increased its loans to customers by 33.07% in the first half of 2022 to N3.38 trillion from N2.54 trillion in the corresponding period of 2021. It also generated interest income on its loans to customers amounting to N166.3 billion in the first half of 2022, compared to N122.03 billion in the first half of 2021.
UBA increased its lending to customers by 4.56% in the first half of 2022 to 2.75 trillion naira from 2.63 trillion naira in the same period last year. It generated interest income of N131.7 billion on loans to customers in the first half of 2022, up 11.23% from N118.4 billion in the first half of 2021.
GTCO reported customer loans totaling N1.83 trillion in the first half of 2022, up 12.27% from N1.63 trillion in the same period in 2021. customer loans improved by 12.27% to N1.83 billion in the first half. half of 2022 compared to 1.63 billion naira in the first half of 2021.