Banking
Agusto Forecasts 16.5% Growth in Nigerian Banking Loan Portfolio
By Adedapo Adesanya
Agusto & Co. Limited, the pan-African credit rating agency and the foremost business information provider, has forecast a 16.5 per cent growth in the Nigerian banking loan portfolio.
This was released in its 2022 Nigerian Banking Industry Report which provides a comprehensive review of Nigeria’s banking industry and the near-term expectation for the Industry.
Agusto & Co. noted positively the resilience shown by the Nigerian banking industry in FY 2021, as the Industry’s loan portfolio grew by 21 per cent despite the weak economy and regulatory constraints.
“Notwithstanding the prevailing global supply constraints, the Russian-Ukraine crisis, and insecurity challenges that continue to hamper food and crude oil production in Nigeria, we anticipate a 16.5 per cent year-on-year loan growth in 2022 as more banks now have a better understanding of the macroeconomic headwinds,” it noted.
The firm noted in the report seen by Business Post that traditional sectors such as oil and gas, manufacturing, general commerce, and agriculture sectors are expected to drive the loan growth given the backward integration initiatives of obligors, the intervention activities of the Central Bank of Nigeria (CBN) and the import-dependence nature of the Nigerian economy.
‘While the arbitrary cash reserve deductions and foreign exchange illiquidity would remain limitations to the growth of the Industry’s loan portfolio, we note that more banks are now favourably disposed to accessing the differentiated cash reserve requirement (DCRR) window to reduce the value of sterile restricted funds with the CBN.
“In the near term, we believe the Industry’s asset quality will remain acceptable, with the impaired loan ratio hovering around 6 per cent as at 31 December 2022. In our view, a proactive tightening of controls around loan origination and intensified loan monitoring will moderate the impact of the tough operating climate on the loan portfolio,” the report stated.
It was revealed that Nigeria’s banking industry remains well capitalised relative to the business risks undertaken and should remain so in the near term.
“In preparation for the full implementation of Basel III and based on the scheduled growth plans, we expect an increased appetite for perpetual bond issuances which qualify as additional tier 1 capital. We also believe that some banks will raise common equity tier 1 capital that will keep the Industry’s capital adequacy ratio above 17 per cent.”
Looking forward, “In FY 2022, Agusto & Co projects a decline in the industry’s net interest spread as the prevailing low yields on government securities, which dominate the industry’s investment securities, will moderate the impact of the uptick in interest rates. However, we anticipate an increase in the net earnings driven largely by higher trading income and electronic banking fees.
“Nevertheless, we note that the forthcoming elections and growing budget deficit have forced the FGN to modify several extant tax legislations which will moderate the banking industry’s profits. Overall, Agusto & Co expects the Industry’s pre-tax return on average equity to increase to 23 per cent (FY 2021: 20.6 per cent) in FY 2022.
“Our financial prospects for Industry are largely stable in the near term. We adjudge the industry as resilient and the current trend of banks adopting the holding company structure to diversify into other financial services segments while exercising control over subsidiaries should support the Industry’s profitability.
“The African Continental Free Trade Area (AfCFTA) is also another vital prospect for Nigerian banks given that financial institutions with a strong capital base and efficient network across the continent are essential for the full implementation of AfCFTA,” it added.
Overall, Agusto & Co believes the banking industry’s performance will remain moderate in the short to medium term and on this basis, adding that the outlook for the Industry is stable.
By Adedapo Adesanya
Global financial payments giant, Visa, has made a strategic investment of $10 million in Nigerian fintech unicorn, Moniepoint, to expand its services and deepen financial inclusion on the African continent.
This development comes three months after Moniepoint raised $110 million in a Series C funding round that made the company a unicorn.
With the new play, Visa joins other investors, including Development Partners International, Google’s Africa Investment Fund, Verod Capital, Lightrock, QED Investors, Novastar Ventures, British International Investment (BII), FMO (the Dutch entrepreneurial development bank), Global Ventures and Endeavor Catalyst as equity partners.
This partnership will combine Moniepoint’s local expertise and innovative business model with Visa’s global resources and capabilities to offer payment solutions to businesses and entities.
Moniepoint provides banking and payment services to small and medium businesses and retail banking. It is one of the market leaders in Nigeria’s agent banking space, with over 300,000 POS agents and has processed billions of transactions since it was founded in 2015.
The new Visa’s investment will further help Moniepoint expand its services and deepen financial inclusion on a continent that still has a comparatively low rate of financial services adoption.
Moniepoint will leverage Visa’s Cybersource system to gain better visibility into transactions. Additionally, it plans to integrate with Visa Direct for remittances and money transfers as it looks to expand into markets within and outside Africa.
Speaking on the move, Mr Tosin Eniolorunda, Founder and Group CEO of Moniepoint said, “Visa’s backing is a strong endorsement of our vision to digitize and support African businesses at scale.
“We aim to deepen financial inclusion, enabling SMEs to access the tools and resources they need to thrive in an increasingly digital economy.”
On his part, Mr Andrew Torre, Regional President, Central and Eastern Europe, Middle East and Africa at Visa, noted that, “Moniepoint has built an impressive platform that directly addresses the needs of Africa’s SMEs, a critical segment in enabling economic development.
”By making financial services and digital payments more accessible and efficient, Moniepoint is helping transform how businesses operate in Nigeria and beyond.
“We are excited to support their next phase of growth and innovation,” he added.
By Dipo Olowookere
Efforts are being made by the management of a rapidly growing financial technology (fintech) company,
Bankit Microfinance Bank (MFB), to grow its loan and gaming services.
The firm said this is one of its targets for 2025 to solidify its position as a leading platform for comprehensive, simplified banking activities after it recorded remarkable growth in 2024 with different milestones as a result of its competitive edge and cutting-edge technology.
The digital financial services provider said it was already talking to its various partners on how to ensure customers get more access to credit facilities for different needs.
It said nothing would be spared to revolutionise digital banking in Nigeria, especially with a focus on innovation, customer protection, and financial inclusion.
Last year, Bankit MFB, within its first few weeks of operations, successfully registered over 50,000 users on its platform, a testament to its innovative simple banking approach to digital banking.
This year, the small lender has an ambitious plan to increase this by 900 per cent to a record 500,000 businesses in 2025.
Business Post gathered that in 2024, the financial institution recorded impressive transaction values, exceeding N100 million, with an impressive 90 per cent transaction success rate.
Since joining the business, it has introduced web banking and other innovative banking products, with more in development.
With the financial services sector not immune to fraud, Bankit MFB said it prioritises the protection of customers’ funds, expressing its commitment to diversifying its digital services to enhance customer experience.
Bankit MFB is a financial institution licenced to operate in the country by the Central Bank of Nigeria (CBN), which is dedicated to providing innovative, customer-centric financial solutions to individuals and others.
By Aduragbemi Omiyale
The Central Bank of Nigeria (CBN) will on Tuesday, January 28, 2025, launch a foreign exchange (FX) code designed to boost the integrity of the market.
A statement from the banking sector regulator on Wednesday said the FX code would be unveiled at its headquarters in Abuja next week.
It explained the forex code will serve as a guideline for the ethical conduct of FX dealers in the Nigerian forex landscape.
“The Central Bank of Nigeria has approved the release of the Nigerian Foreign Exchange (FX) Code as a guideline to the banking industry to promote the ethical conduct of Authorised Dealers in the Nigerian Foreign Exchange Market.
“The bank will formally launch the code at the CBN Head Office Auditorium, Abuja, on Tuesday, January 28, 2025,” the statement read.
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