Access Holdings, Five Others Incur N2.04trn On Customers’ Deposits
Access Holdings Plc and five other banks including their offshore subsidiaries across the African continent incurred a total N2.04 trillion expenses on customers’ deposits in 2023.
The amount is the interest paid on customers’ deposits including current, savings accounts, and term deposits.
The N2.04 trillion paid to customers is a 108.3 per cent increase over the N978.5 billion reported in 2022.
Other banks are Zenith Bank Plc, United Bank for Africa (UBA) Plc, Guaranty Trust Holding Company Plc, Stanbic IIBTC Holdings Plc, and Wema Bank Plc.
Central banks in Africa favoured interest rate hikes as part of a monetary tightening strategy to curb inflation and align long-term target objectives. As the year progressed, inflation moderated, leading to the establishment of a more stable interest rate environment by year-end.
However, the inflation rate in Nigeria closed 2023 at 28.92 per cent, according to the National Bureau of Statistics (NBS).
The breakdown revealed that Access Holdings announced N958.99 billion interest expenses in 2023, a growth of 105 per cent from N467.8 billion reported in 2022, while Zenith Bank declared N408.49 billion interest expenses in 2023, a growth of 135 per cent from N173.5 billion in 2022.
As UBA reported N367.881 billion interest expenses in 2023, a growth of 107 percent from N177.66billion in 2022, GTCO reported N114.06 billion interest expenses in 2023, representing an increase of 73 per cent from N66.1 billion in 20222.
UBA in a presentation said, “Customer deposits continue to dominate the Bank’s funding mix (84 per cent), which demonstrates combined efforts at deepening our wallet share of the Corporate, Commercial, and Retail business. Low-cost deposit instrumental to achieving a modest cost of funds.”
“The increase in interest rates in response to rising Inflationary pressures impacted interest paid on savings accounts, leading to an increase in the cost of funds from 1.2per cent in 2022 to 1.4 per cent in 2023,” according to GTCO in its presentation to investors and analysts.
In addition, Stanbic IBTC reported N95.4 billion interest expenses in 2023, an increase of 141 per cent from N39.55 billion in 2022, while Wema Bank declared N93.92 billion interest expenses in 2023, a growth of 75 per cent from N53.81billion reported in 2022.
The Central Bank of Nigeria (CBN) in its “money market indicator” revealed that average rate on Savings deposit rise to 5.28 per cent from 4.13 per cent in 2022, while 12 months average deposit by customer increased to 9.75 per cent in 2023 from 8.22 per cent in 2022.
The six banks, however, generated N4.78 trillion interest income in 2023, a growth of 93 per cent from N2.47 trillion reported in 2022.
The Chief Research Officer, InvestData Consulting Limited, Omordion Ambrose said, “Businesses need a lot of credit facilities to survive, but in an environment where the lending rate is astronomical, many enterprises, especially small and medium-scale, might find it extremely difficult to survive as their products will remain uncompetitive and the cost of production and the sale prices to consumers will remain high.”
He added that, “A hike in interest rate is often considered a manufacturers’ nightmare as it stifles productivity and expansion.”