Rates fell as central bank boosted stimulus to support economy
It’s not just the pandemic that’s putting Nigerian bank earnings at risk: Competition for customers in the recession-hit economy is driving interest rates on loans lower.
Mid-tier lender FCMB Group Plc is forecasting that first-quarter earnings will fall more than 20% as rates decline, pushing the Lagos-based bank to accelerate lending to compensate for the profit squeeze. Guaranty Trust Bank Plc, Nigeria’s biggest bank by market value, reported flat interest income for the first nine months of 2020 compared with a year earlier.
“Customers have come forward to renegotiate rates and competitors are dropping rates,” FCMB Chief Financial Officer Kayode Adewuyi said by phone from Lagos, Nigeria’s commercial hub. “One way to counter that is to ramp up loan growth and ensure that your margins are healthy.”
By Goddy Egene
The year-to-date (YTD) growth of the Nigerian Stock Exchange (NSE) All-Share Index (ASI) hit 32.2 per cent yesterday on the back of the continued bull run.
The market has recorded positive performance in the past three days with the NSE ASI gaining 0.76 per cent to close at 35,493.15.
The sustained gains have boosted the YTD growth to 32.2 per cent. Also, the market capitalisation added N 140 billion to close at N18.6 trillion.
The positive performance yesterday was buoyed by buying interest in bellwethers such as Nestle Nigeria Plc, Zenith Bank Plc, and Guaranty Trust Bank Plc. In all, 26 stocks appreciated while 13 stocks depreciated. AXA Mansard Insurance Plc led the price gainers with 10 per cent, trailed by May & Baker Nigeria Plc with 9.8 per cent. NCR Nigeria Plc garnered 9.6 per cent, just as University Press Plc went up 9.2 per cent
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Johnson Okafor
Transactions in the Nigerian equity market on Thursday closed on a negative note as losing streak extends to the fourth consecutive trading day, following sell-off on some high valued stocks.
The market breadth closed negative, recording six gainers and 40 losers.
The Nigerian Stock Exchange All-Share Index dipped 444 basis points or 1.27 per cent to close at 34,577.26 index points as against 35,021.26 recorded the previous trading session.
The market capitalisation of equities depreciated by N232bn from N18.30tn the previous day to N18.07tn as market sentiment remained in the negative territory.
Meanwhile, a turnover of 553.95 million shares exchanged in 6,441 deals was recorded in the day’s trading.
Nigerian bank earnings threatened as competition for recession-hit customers drive interest rates down naija247news.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from naija247news.com Daily Mail and Mail on Sunday newspapers.
Next Profit Threat Faces Nigerian Banks Hanging Onto Clients
Emele Onu, Bloomberg News BC-Next-Profit-Threat-Faces-Nigerian-Banks-Hanging-Onto-Clients , Emele Onu
(Bloomberg) Itâs not just the pandemic thatâs putting Nigerian bank earnings at risk: Competition for customers in the recession-hit economy is driving interest rates on loans lower.
Mid-tier lender FCMB Group Plc is forecasting that first-quarter earnings will fall more than 20% as rates decline, pushing the Lagos-based bank to accelerate lending to compensate for the profit squeeze. Guaranty Trust Bank Plc, Nigeriaâs biggest bank by market value, reported flat interest income for the first nine months of 2020 compared with a year earlier.