See the top eight Nigerian banks with highest earnings from loans

2 months ago 4

Nigerian banks have raked in trillions in interest income generated due to a hike in interest rates by CBN
About eight Nigerian banks generated about N4.8 trillion from interests charged on loans
Zenith Bank, Access Bank, Guarantee Trust Bank, and First Bank led the list of the eight banks with the most interest income

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

The rate hike carried out by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to fight inflation has increased eight commercial banks' combined net interest incomes by 163.19% to N4.79 trillion in the first six months of this year.

A breakdown of the banks' financial reports shows an increase from the N1.82 trillion recorded in the same period last year.

Manufacturers lament high interest rates

An analysis of the banks’ latest financials disclosed that the top-tier banks such as Zenith Bank, Access Bank, Guarantee Trust Holdling, Stanbic IBTC, First Bank, Sterling Bank, Wema Bank, and FCMB show their ability to benefit from increased lending rates and strategic interest-generating assets.

Meanwhile, as the financial sector basks in the gains of interest rate hikes, the manufacturing sector gasps for breadth following the hike in interest rates and expensive loan servicing.

The development is due to interest rate hikes, which cause banks to charge higher rates on their variable-rate loans and a higher rate on their new fixed-rate loans.

However, banks are at risk when rates fall as interest income shrinks.

The amount used for loan serving during this period shows the high-interest rate operating environment as Nigeria’s benchmark rate hits N26.75%

The MPC recently kept a hawkish stance on monetary policy, raising the Monetary Policy Rate to fight inflation.

CBN raises interest rates three times in 2024

Legit.ng reports that the apex bank raised the interest rate by 50 basis points from 26.25% to 26.75% in July as Nigeria’s inflation accelerated to 34.19%

Punch reports that the CBN has increased the MPR significantly this year to 800 basis points to 26.75% from 18,75% last year, causing a sharp increase in the bank’s lending rates, leaving the borrowers to bear the brunt.

Analysts expect a pause in rate hikes following the declining inflation figures for July and August.

Banks with the highest earnings from loans

An analysis of the banks’ interest income shows that Zenith Bank led the list, with an interest income of N1.15 trillion for the six months of the year, representing a 176.8% increase from N415.43 billion in the same period of 2023.

Access Bank’s earnings from interest income hit N1.29 trillion as of June 2024, from N596.14 billion recorded in the same period last year.

GTCo reported an interest income of N617.89 billion in the first half of 2024 relative to N225.95 billion recorded last year.

First Bank reported an interest income of N501.55 billion for the year's second half, up from N197.41 billion recorded in 2023.

According to reports, Stanbic IBTC's interest income was N246.13 billion in June this year, up from N110.26 billion in the same period last year.

Sterling Bank recorded an interest income of N147.31 billion in the first half of 2024 from the N76.96 billion recorded in the first half of 2023, showing a 90.1% increase.

Wema Bank recorded an interest income of N146.07 billion as of June from N76.65 billion last year.

FCMB recorded an interest income of N269.16 billion in the first half of the year, an 80.6% increase from N149.03 billion in 2023.

Access Bank’s Pre-Tax Profit Surges to N348.9bn

Earlier, Legit.ng reported that Access Holdings Plc, the parent company of Access Bank, posted a pre-tax profit of N348.9 billion for the first six months of 2024, as Nigerian banks continue to enjoy profits at high interest rates.

The holding company’s pre-tax profit during the first six months of 2024 represents 108% yearly growth from the N167.6 billion it posted in the same period in 2023.

Also, the group posted a 107.7% yearly profit growth after tax, which hit N281.3 billion in the first half of 2024 from N135.4 billion in the first half of 2023.

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Source: Legit.ng

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