Nigerian banks are profiting from the high-interest rate environment brought on by the Central Bank of Nigeria’s hawkish stance to increase interest rates by a total of 400 basis points between March and November 2022.
Data from the nine-month financial results of some Nigerian banks available on the Nigerian Exchange Group show that the aggregate interest income generated by banks rose by 26.01 percent to N3.12 trillion in the nine-month period that ended September 2022 from N2.48 trillion in the corresponding period of 2021.
BusinessDay analysed eleven (11) banks comprising FBN Holdings, United Bank for Africa, Guaranty Trust Holding Company, Access Holdings, Zenith Bank, Ecobank Transnational Incorporated, Fidelity Bank, FCMB Group, Union Bank of Nigeria, Stanbic IBTC Holdings as well as Wema Bank.
According to additional analysis of the financial results, banks’ interest income from loans and advances to consumers accounted for 65 percent or N2.03 trillion of the total interest income made during the first nine months of 2022.
Furthermore, during the period under review, total interest income generated by these banks claimed 66.48 percent of the total gross earnings which stood at N4.69 trillion in the nine-month period of 2022.
Individual bank analysis
Access Holdings (Access Bank)
Leading the pack with the highest interest income generated amongst its peers in the nine-month period ended September 2022, Access Holdings reported a 21.48
percent increase in interest income to N571.98 billion from N470.86 billion in the corresponding period of 2021.
The growth in its interest income was driven mainly by the interest income generated from loans and advances to customers which grew by 34.81 percent year on year (N352.01 billion in 9M’2022) accounting for 61.54 percent of the total interest income generated in the nine-month period of 2022.
Interest income from investment securities also grew to N200.62 billion in the nine-month period of 2022 from N191.77 billion in the nine-month period of 2021. The bank’s total interest income during the period accounted for 63.07 percent of its gross earnings which stood at N906.93 billion.
Ecobank Transnational Incorporated (ETI)
Ecobank Transnational Incorporated, the pan-African bank generated interest income amounting to N485.84 billion in the nine-month period of 2022, representing a 9.15 percent increase from N445.12 billion in the nine-month period of 2021. Interest income derived from loans and advances to customers accounted for the bulk (53.48 percent) of total interest income generated, amounting to N259.82 billion in the nine-month period of 2022, while interest income from investment securities accounted for 42.78 percent during the period amounting to
N207.85 billion.
Furthermore, in the period under review, Ecobank’s interest income accounted for 63.82 percent of its gross earnings, totaling N761.29 billion.
United Bank for Africa (UBA)
UBA grew its interest income by 22.26 percent in the nine-month period of 2022 to N420.23 billion compared to N343.71 billion in the same period of 2021. The growth in its interest income can be attributed to the 16.4 percent growth in the interest income derived from loans and advances to customers during the period.
Interest income derived from loans and advances to customers grew to N217.78 billion in the nine-month period of 2022 from N187.06 billion in the corresponding
quarter of 2021, thereby accounting for 51.82 percent of total interest income generated in the period.
Interest revenue from investment securities increased by 29.4 percent to N168.87 billion in the nine months of 2022 from N130.50 billion in the nine months of 2021, with bonds’ interest providing the increase (up 41 percent year on year). The Bank’s gross earnings stood at N607.98 billion in the nine-month period of 2022, with interest income accounting for 69.12 percent.
Zenith Bank
The interest income reported by Zenith Bank surged by 26.53 percent to N390.76 billion in the nine-month period of 2022 from N208.84 billion in the corresponding period of 2021. The increase was primarily driven by the 30 percent rise in interest income generated from investment securities.
Driven by the growth in commercial papers and government bonds, interest income generated from investment securities grew to N122.97 billion in the nine-month period of 2022 from N94.59 billion in the corresponding period of 2021.
Interest income from loans and advances to customers on the other hand grew by 26.29 percent to N261.25 billion in the nine-month period of 2022 from N206.86 billion in the nine-month period of 2021, accounting for 66.86 percent of interest from loans to customers. Total interest income generated during the period by Zenith Bank accounts for 62.97 percent of its gross earnings (N620.57 billion).
FBN Holdings (First Bank)
First Bank’s interest income rose by 42.38 percent, thereby accounting for 67.68 percent of the total gross earnings amounting to N547.24 billion in the nine-month period of 2022.
Its interest income grew to N370.36 billion in the nine-month period of 2022 from N260.12 billion in the corresponding period of 2021, on the back of a 55 percent increase in interest income from investment securities during the period. Interest income derived from investment securities grew to N80.45 billion in the nine-month period of 2022 from N51.94 billion in the same period last year. While interest income from loans and advances to customers grew by 47 percent in the nine-month period of 2022, it accounted for 73.09 percent of the total interest
income reported by First Bank.
Interest income from loans and advances to customers amounted to N270.71 billion in the nine-month period of 2022 from N184.19 billion in the nine-month period of last year.
Guaranty Trust Holding Company (GTCO)
GTCO’s interest income increased by 19.20 percent to N195.04 billion in the nine-month period of 2022 to N232.49 billion from N195.04 billion in the same period last year.
Growing by 13 percent, interest income received from loans and advances to customers grew to N159.87 billion in the nine-month period of 2022 from N141.25 billion in the nine-month period of 2021, thereby accounting for 68.76 percent of the total interest income generated. Investment securities in the nine-month period of 2022 stood at N28.25 billion, growing marginal by 2 percent from N27.59 billion in the same period last year.
Total interest income during the period accounted for 63.82 percent of the gross earnings of N364.31 billion realise.
Fidelity Bank
Fidelity Bank’s interest income grew by 49.49 percent to N198.31 billion in the nine-month period of 2022 from N132.66 billion in the nine-month period of 2021 on the back of an increase in interest income from investment securities.
Interest income derived from investment securities in the nine-month period of 2022 stood at N31.29 billion from N17.36 billion, representing an 80 percent increase.
Interest income derived from loans and advances to customers grew by 46.3 percent to N163.21 billion in the nine-month period of 2022 from N111.54 billion in the same period last year, thereby accounting for 82.30 percent of the total interest income generated for the period.
In the nine-month period of 2022, the total interest income for Fidelity Bank accounts for 81.98 percent of its gross earnings of N241.89 billion.
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FCMB Group
The nine-month financial results of FCMB Group reveal that interest income grew by 33.11 percent to N154.08 billion in the nine-month period of 2022 from N115.75 billion in the nine-month period of 2021. Its increase was primarily driven by the 88.29 percent increase in interest income earned from investment securities amounting to N30.24 billion in the nine-month period of 2022 from N16.06 billion in the same period last year. Interest income from loans and advances to customers accounted for 79.84 percent of total interest income but grew by 24 percent to N123.01 billion in the nine-month period of 2022 from N99.13 billion in the nine-month period of 2021.
Its total interest income as a percentage of its gross earnings, representing N200.07 billion in 9M’2022 stood at 77.01 percent, accounting for the majority of income generated from interests charged.
Union Bank of Nigeria
Its interest income grew by 37.20 percent to N109.64 percent in the nine-month period of 2022 from N79.91 billion in the corresponding period of 2021, owing to the 74 percent increase in interest income from investment securities. Interest income from investment securities grew to N14.39 billion in the nine-month period of 2022 from N8.26 percent in the corresponding period of 2021.
Interest income from loans and advances to customers accounted for 71.26 percent of the total interest income, as it grew by 21.87 percent to N78.13 billion in the nine-month period of 2022 from N64.11 billion in the nine-month period of 2021.
Its total interest income as a percentage of its gross earnings which amounted to N141.53 billion in 9M’2022 stood at 77.47 percent, accounting for the majority of income generated from interests charged.
Stanbic IBTC Holdings
Stanbic IBTC reported an interest income amounting to N107.06 billion in the nine-month period of 2022 from N73 billion in the nine-month period of 2021, representing a marked increase of 46.66 percent. The increase was largely due to the 51 percent increase in interest income generated from loans and advances to customers during the period totaling N82.47 billion from
N54.96 billion in the same period last year. Interest income received from investment securities grew by 35 percent to N23.79 billion in the nine-month period of 2022 from N17.69 billion in the same period last year.
Its total interest income as a percentage of its gross earnings or N207.4 billion in 9M’2022 stood at 51.62 percent, accounting for the majority of income generated from interests charged.
Wema Bank
Wema Bank reported the highest growth in interest income among its peers by 55.13 percent to N79.97 billion in the nine-month period of 2022 from N51.55 billion in the nine-month period of 2021.
Its interest income surged by 241.6 percent on income from investment securities which totalled N16.67 billion in the nine-month period of 2022 from N4.88 billion in the corresponding period of 2021. Interest income from loans and advances to customers grew by 40 percent to N62.25 billion in 9M’2022 from N44.39 billion in 9M’2021.
Wema’s total interest income as a percentage of its gross earnings or N95.35 billion in 9M’2022 stood at 83.87 percent, accounting for the majority of income generated from interests charged.
