Business

Banks In Earnings Windfall Under High Interest Rate Regime

Published

2 years ago

July 10, 2023

There are indications that banks are reaping huge returns from the rising interest rate environment following Central Bank of Nigeria, CBN, inflation targeting interest rate regime.

Already the first quarter 2023, Q1’23, results of some of the leading banks are pointing in this direction as their earnings from lending activities rose Year-on-Year (YoY) by 46.02 percent during the period.

This sharp rise followed a mark-up in their lending rates in response to a steady upward adjustment in the benchmark interest rate, Monetary Policy Rate (MPR) by the CBN.

In its bid to check inflationary pressure, the CBN had started interest rate hike in the third quarter of 2022, which culminated to a rise in the MPR to 18.5 percent as at May 24, 2023, a third-consecutive hike this year.

The development also resulted in a record rise in borrowing cost to its highest since the monetary policy rate was adopted in 2006.

This also contributes to the headaches of the real sector of the economy as manufacturers complain of their operations being shackled by high cost of funding while banks rake in strong earnings.

Financial statements of the banks for the review period showed that the banks raked in N1.39 trillion as interest on loans, a 46.02 percent increase compared to N954.1 billion in Q1’22.

The banks are Access Holdings Plc, Stanbic IBTC Holdings Plc, Guaranty Trust Holding Company (GTCo) Plc, United Bank for Africa (UBA) Plc, FBN Holdings Plc, Fidelity Bank Plc, Unity Bank Plc, Ecobank Transnational Incorporated (ETI) Plc, Union Bank of Nigeria Plc, Wema Bank Plc, Zenith Bank Plc and FCMB Group Plc.

Recall that Financial Vanguard had exclusively reported that the rising interest rate is now choking companies as funding costs for 30 companies previously analysed by Financial Vanguard spiked by 19.9 percent to N79.34 billion in Q1’23 as against N66.17 billion in the corresponding period in 2022.

A breakdown of the banks interest income showed that though the banks recorded growth in their loan book, earnings from lending rose faster than the loan portfolio.

The banks’ loan book for the period grew by 18.7 percent to N29.47 trillion from N24.84 trillion in Q1’22, a 27.32 percentage point slower than the growth margin in interest income.

However, investment analysts fear that the steady increase in banks lending rates may trigger an increase in Non-Performing Loans (NPLs) as customers may now struggle to repay the loans.

They opined that the trend puts Nigeria’s manufactured goods and services at competitive disadvantage, making imports more attractive than exports.

Banks’ earnings from lending activities

FBN Holdings Plc recorded the highest increase in its interest income as its earnings from lending activities jumped by 64.1 percent to N179.61 billion from N109.45 billion in Q1’22. Meanwhile, its loan book grew by 29.1 percent to N3.95 trillion in Q1’23 from N3.06 trillion in the corresponding period in 2022.

UBA, which grew its loan book by 15.8 percent, followed, recording a 53.41 percent increase in its interest income to N191.88 billion from N125.08 billion in 2022.

Stanbic IBTC Holdings Plc was the third with 52.8 percent increase to N50.42 billion from N33 billion in 2022. The bank’s loan book grew by 22.45 percent to N1.2 trillion from N980 billion in the corresponding period in 2022.

Zenith Bank followed with a 51.6 percent increase in its interest income to N191.63 billion in Q1’23 from N126.38 billion, while its loan book grew by 13.5 percent to N4.03 trillion.

Others are Access Holdings Plc with 46.31 percent increase to N254.12 billion; GTCO Plc (43.63% to N82.52bn); Fidelity Bank (42.5% to N86.003bn); FCMB Group (41.4% to N66.04bn); Wema Bank (35.4% to N33.88bn) and Ecobank (32.7% to N207.22bn).

Unity Bank, the only bank whose loan book shrinked (-34.9%) during the period, posted an 11.1 percent increase in its interest income to N10.58 billion from N9.52 billion in the corresponding period in 2022.

Perpetuates import dependence, may trigger NPLs growth – Experts

In his views, David Adonri, Vice Chairman, Highcap Securities, said that high interest rate environment perpetuates Nigeria’s dependence on importation as rising interest rate makes local manufacturing and exports uncompetitive.

He stated: “As a result of the contractionary monetary policy of CBN since 2022, interest rates have continued to increase in the economy. Banks have transferred this rate hike to their customers by increasing the cost of credit.

“Rising interest rates have also increased the yield on public debt to which banks are the highest subscribers. All these have facilitated the banks’ interest income which has risen remarkably by 46.02% within one year.

“While banks are enjoying the bonanza, borrowers and consumers are groaning under the escalating cost of doing business and rising inflation attendant to high cost of funds.

“With globalization and liberalization of trade, rising cost of funds put Nigerian produced goods and services at a competitive disadvantage internationally, making imports to be cheaper than export. This perpetuates import dependence and erodes productive employment in Nigeria.”

Victor Chiazor, Head Research and investment at FSL Securities, said: “The combined growth of 46.02% in interest income reported by the banks for the first quarter of 2023 was largely as a result of the high interest rate environment which was triggered by the Nigerian central bank’s desire to halt the rising inflation rate by increasing its monetary policy rate.

“The high interest rate environment increased the banks earnings on interest income, but, on the flip side, also increased the banks interest expense as customers demanded more returns for both their deposits and placements with the banks.

“We also observed that the banks’ net interest income grew during the period as their income margins improved during the period.

“The high interest rate environment would reduce the demand for new loans while we may also see increased non-performing loans and impairment by the banks as consumers struggle to repay such loans due to the high interest element.”

Mallam Garba Kurfi, Managing Director/CEO, APT Securities and Fund, said: “As you are aware, the CBN kept increasing MPR after every MPC sitting, which gives banks the opportunity to increase the interest charge on the given loans. That increased their income on the already given loans.”
VANGUARD

Business

Full List: 82 Newly Approved, Fully Licensed BDC Operators

Published

3 days ago

December 9, 2025

Editor

The Central Bank of Nigeria (CBN) has granted final operating licences to 82 Bureaux De Change (BDC) operators under its revised regulatory framework, reinforcing warnings against transactions with unlicensed foreign exchange dealers.

In a statement on Monday, the Acting Director of Corporate Communications, Hakama Sidi-Ali, confirmed that the licences took effect on November 27, 2025, in accordance with the 2024 Regulatory and Supervisory Guidelines for BDC Operations. The guidelines require all operators to meet specified capital thresholds and regulatory conditions to qualify for licensing.

“The Central Bank of Nigeria, in exercise of its powers under the Banks and Other Financial Institutions Act (BOFIA) 2020 and the 2024 Guidelines, has granted final licences to 82 Bureaux De Change to operate with effect from November 27, 2025,” the statement read.

The apex bank emphasised that only BDCs listed on its official website are considered fully licensed, urging the public to verify the status of any operator before engaging in foreign exchange transactions.

“While the CBN will continue to update the list of Bureaux De Change with valid operating licences for public verification on our website, the Bank advises the general public to avoid dealing with unlicensed Foreign Exchange Operators,” the statement warned.

The CBN noted that operating a BDC without a valid licence constitutes an offence under Section 57(1) of the BOFIA 2020, and confirmed that legal action would be taken against non-compliant operators.

TIER 1

1 DULA GLOBAL BDC LTD

2 TRURATE GLOBAL BDC LTD

TIER 2

1 ABBUFX BDC LTD

2 ACHA GLOBAL BDC LTD

3 ARCTANGENT SWIFT BDC LTD

4 ASCENDANT BDC LTD

5 BARACAI BDC LTD

6 BERGPOINT BDC LTD

7 BRAVO MODEL BDC LTD

8 BRIMESTONE BDC LTD

9 BROWNSTON BDC LTD

10 BUZZWALLET BDC LTD

11 CASHCODE BDC LTD

12 CHATTERED BDC LTD

13 CHRONICLES BDC LTD

14 COOL FOREX BDC LTD

15 CORPORATE EXCHANGE BDC LTD

16 COURTESY CURRENCY BDC LTD

17 DANYARO BDC LTD

18 DASHAD BDC LTD

19 DEVAL BDC LTD

20 DFS BDC LTD

21 EASY CASH BDC LTD

22 ELELEM BDC LTD

23 E-LIOYDS BDC LTD

24 ELOGOZ BDC LTD

25 ENOUF BDC LTD

26 EVER JOJ GOLD BDC LTD

27 EXCEL RIJIYA FOREX BDC LTD

28 FABFOREX BDC LTD

29 FELLOM BDC LTD

30 FINE BDC LTD

31 FOMAT BDC LTD

32 GENELO BDC LTD

33 GENTLE BREEZE BDC LTD

34 GRACEFUL GLORY AND HUMILITY BDC LTD

35 GREENGATE BDC LTD

36 GREENVAULT BDC LTD

37 HAZON CAPITAL BDC LTD

38 HIGH-POINT BDC LTD

39 I & I EXCHANGE BDC LTD

40 IBN MARYAM BDC LTD

41 JOURNEY WELL BDC LTD

42 KEEPERS BDC LTD

43 KHADHOUSE SOLUTIONS BDC LTD

44 KIMMELFX BDC LTD

45 KINGSOFT ATLANTIC BDC LTD

46 M.S. ALHERI BDC LTD

47 MASTERS BDC LTD

48 MCMENA BDC LTD

49 MKOO BDC LTD

50 MKS BDC LTD

51 MR J GOLF BDC LTD

52 MUSDIQ BDC LTD

53 MZ FOREX BDC LTD

54 NEJJ BDC LTD LTD

55 NETVALUE BDC LTD

56 NEW WAVE BDC LTD

57 NOTABLE AND KINGSTON BDC LTD

58 PILCROW BDC LTD

59 RAPID BDC LTD

60 RIGHTWAY BDC LTD

61 RWANDA BDC LTD

62 SABLES BDC LTD

63 SAFETRANZ BDC LTD

64 SAMFIK BDC LTD

65 SEVENLOCKS BDC LTD

66 SHAPEARL BDC LTD

67 SIMTEX BDC LTD

68 SOLID WHITE BDC LTD

69 ST. NICHOLAS GLOBAL BDC LTD

70 TOPFIRST UNIQUE MULTICHOICE BDC LTD

71 TOPGATE BDC LTD

72 TRAVELLER’S CHOICE BDC LTD

73 TUCA GLOBAL BDC LTD

74 TURBOVA BDC LTD

75 TURN-UP BDC LTD

76 UNIGO BDC LTD

77 VICTORY AHEAD BDC LTD

78 WHITEWAY WWW BDC LTD

79 YUND GLOBAL LINK BDC LTD

80 ZAMAD FOREX BDC LTD

Business

CBN Issues 82 New BDC Licences, Moves To Curb Unregistered FX Operators

Published

3 days ago

December 9, 2025

Editor

The Central Bank of Nigeria (CBN) has granted final operating licences to 82 Bureaux De Change (BDC) under its updated regulatory framework and cautioned members of the public against engaging with unlicensed foreign exchange operators.

In a statement issued on Monday and signed by the Acting Director of Corporate Communications, Hakama Sidi-Ali, the Bank said the licences became effective on 27 November 2025. The approvals were granted under the 2024 Regulatory and Supervisory Guidelines for BDC Operations in Nigeria.

The CBN stressed that only BDCs listed on its official website are recognised as licensed operators. It encouraged the public to verify the licensing status of BDCs before engaging in any foreign exchange transactions.

The Bank reiterated that running a BDC without proper authorisation constitutes an offence under Section 57(1) of the BOFIA 2020. It stated that enforcement actions would be taken against violators.

The licensing exercise forms part of the CBN’s broader initiative to reform the foreign exchange market and ensure that only compliant operators participate in the sector. Under the 2024 guidelines, which took effect in June 2024,
all BDCs are required to reapply for Tier 1 or Tier 2 licences.

The guidelines stipulate minimum capital requirements of ₦2 billion for Tier 1 and ₦500 million for Tier 2, along with non-refundable licensing fees of ₦5 million and ₦2 million, respectively.

The CBN said it would continue its efforts to maintain order and transparency in the foreign exchange market.

Business

JUST IN: CBN Removes Cash Deposit Limits, Raises Weekly Withdrawal To N500,000

Published

1 week ago

December 3, 2025

Editor

The Central Bank of Nigeria (CBN) has removed cash deposit limits and also increased the weekly cash withdrawal limit from N100,000 to N500,000.

The CBN made this known in a circular to all banks and other financial institutions, signed by Dr Rita Sike, Director, Financial Policy and Regulation Department.

Sike said that the revisions formed part of ongoing efforts to moderate the rising cost of cash management and address security concerns.

According to her, it will also curb money laundering risks associated with heavy reliance on cash.

She said that the cash-related policies previously issued in response to evolving circumstances were aimed at reducing cash usage and promoting the adoption of electronic payment channels.

“However, with time, the need to streamline and update these provisions to reflect present-day realities became necessary,” she said.

She said that with effect from Jan. 1, 2026, the cumulative deposit limit would be removed and the fee previously charged on excess deposits would no longer apply.

The director said that the cumulative weekly withdrawal limit across all channels has been reviewed to N500,000 for individuals and five million Naira for corporates.

“Withdrawals above these thresholds will attract excess withdrawal charges as specified,” she said. “The special monthly authorisation that allowed individuals to withdraw five million Naira and corporates N10 million once a month has been abolished.”

She said that for Automated Teller Machines (ATMs), daily withdrawal remains capped at N100,000 per customer, with a maximum of N500,000 weekly.

She said that this formed part of the overall weekly withdrawal limit applicable to all channels, including point-of-sale (POS) transactions.

Sike said that excess withdrawals above the stipulated limits would attract three per cent for individuals and five per cent for corporate customers.

According to her, this will be shared in the ratio of 40 per cent to the CBN and 60 per cent to the operating bank or financial institution.

She directed banks to load all currency denominations in ATMs, while the existing limit on over-the-counter encashment of third-party cheques remains pegged at N100,000.

Sike said that such withdrawals would be counted as part of the cumulative weekly limit.

The director said that banks were also required to render monthly returns to the relevant supervisory departments.

She listed the departments to include the Banking Supervision Department, Other Financial Institutions Supervision Department, and the Payments System Supervision Department.

Sike said that revenue-generating accounts of federal, state, and local governments were exempted from the new withdrawal rules.

She said that accounts of microfinance banks and primary mortgage banks held with commercial and non-interest banks are also exempted from the new rules.

She, however, said that the long-standing exemption previously enjoyed by embassies, diplomatic missions, and aid-donor agencies had been removed.