Lending rates fall as ETI, FBNH and 5 others generate
By Chinwendu Obienyi
With large excess liquidity in the banking sector, its lending rate fell to around 27.61% in the first half (H1) of 2022, the lowest in five years.
This was even as 7 banks generated around N570 billion from interest income on loans during the reporting period.
Central Bank of Nigeria (CBN) data on bank deposit and lending interest rates in the first quarter (Q1) of 2022 showed a 1.04% drop in the average lending rate to 26, 61% in March 2022, compared to 27.65% in March 2022. January.
Banks’ prime rate over the period rose to 12.29% in June, the highest in 17 months, while the maximum lending rate fell to 27.61% in June 2022 from 27.65% in January 2022.
The prime lending rate is the interest rate charged by banks to the largest, most secure and creditworthy customers on short-term loans, while the maximum lending rate refers to the overall percentage of the prime lending rate.
The development saw seven of the tier one banks generate N570.43 billion in interest income on loans made to customers during the review period as part of a monetary policy rate hike (MPR ).
This contrasts with N457.95 billion extended to customers in the first half of 2021. Excluding Sterling Bank Plc, other banks including Ecobank Transnational Incorporated (ETI), FBN Holdings Plc, FCMB Group Plc, Union Bank , Unity Bank Plc and Wema Bank Plc generated a double-digit increase in interest income on loans made to customers during the period under review.
Specifically, Sterling Bank Plc reported interest income of N47.04 billion on loans to customers in the first half of 2022, an increase of 7.88% from N43.61 billion in the first half. 2021.
For ETI, customer loan interest income increased by 16.3% to N168.7 billion in the first half of 2022 from N145.08 billion in the first half of 2021, while FBN Holdings announced a 36% increase to N166.32 billion in interest income from loans. to customers in the first half of 2022 compared to N122.03 billion in the first half of 2021.
FCMB Group reported interest income of N78.75 billion on customer loans in the first half of 2022, an increase of 25% from N63.08 billion in the first half of 2021, while the Union Bank closed the first half of 2022 with interest income of N50.46 billion on customer loans compared to N40.7 billion in the first half of 2021.
Unity Bank reported interest income of N19.17 billion on loans to customers in the first half of 2022, an increase of 26% from N15.15 billion in the first half of 2021, while Wema Bank generated a whopping N39.97 billion from customer loan interest income in the first half of 2022 compared to N28.33 billion in the first half of 2021.
Commenting on the development, Highcap Securities Limited Vice Chairman David Adnori said most customers have only been able to secure loans at above prime rates, mainly because they are more likely to not not repay a loan.
“An increase in the MPR by the MPC will cause the price (interest rate) you pay to borrow to increase and vice versa. Banks have responded to this increase by also increasing their lending rate. should pay more when they borrow from the bank.