• Hausa Edition
  • Podcast
  • Conferences
  • LeVogue Magazine
  • Business News
  • Print Advert Rates
  • Online Advert Rates
  • Contact Us
Saturday, June 7, 2025
Leadership Newspapers
Read in Hausa
  • Home
  • News
  • Politics
  • Business
  • Sport
  • Health
  • Entertainment
  • Opinion
    • Editorial
  • Columns
  • Football
  • Others
    • LeVogue Magazine
    • Conferences
    • National Economy
  • Contact Us
No Result
View All Result
  • Home
  • News
  • Politics
  • Business
  • Sport
  • Health
  • Entertainment
  • Opinion
    • Editorial
  • Columns
  • Football
  • Others
    • LeVogue Magazine
    • Conferences
    • National Economy
  • Contact Us
No Result
View All Result
Leadership Newspapers
No Result
View All Result

Banks’ Profitability To Rise Over MPR Rate Hike – Fitch

...As NACCIMA warns of hyperinflation, negative implications

by Bukola Aro-Lambo and Adegwu John
1 year ago
in Business
Fitch
Share on WhatsAppShare on FacebookShare on XTelegram

Following the latest rake hike by the Monetary Policy Committee(MPC) of the Central Bank of Nigeria (CBN), international rating agency, Fitch Ratings said, it expects banks in the country to record an increased profitability that is hinged on improvement in net interest margins.
The rating agency, while commenting on the rate hike said, profitability of banks in the country will benefit from a marked increase in net interest margins (NIMs) driven by recent increases in the monetary policy rate.

Advertisement

This is as the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) has expressed concerns over the recent hike of the country’s Monetary Policy Rate (MPR), also known as interest rate, from 22.75 per cent to 24.75 per cent by the CBN, noting that the change will come with unintended negative consequences including higher inflation among others.
The CBN had increased the monetary policy rate by 200bp to 24.75 per cent and maintained the cash reserve ratio (CRR) requirement for commercial banks at 45 per cent of naira deposits on 26 March in an effort to control inflation and support the naira.

Inflation accelerated to 31.7 per cent in February from 29.9 per cent in January.
This was the second rate increase in a month, following a 400bp increase on 27 February, when the CRR requirement was raised to 45 per cent from 32.5 per cent. The notable tightening of monetary policy marks progress in Nigeria’s efforts to contain inflation and support a more market-determined exchange rate.

The rate rise, it stressed, accompanies a sharp increase in fixed-income yields since the large naira devaluation at the end of January, adding that, high proportion of fixed-income securities held by the banking sector is short-term, so the increased yields will quickly feed through to higher asset yields, even as asset yields will also benefit from most loans being variable-rate, enabling upward repricing in response to rising interest rates.

“However, we expect banks to exercise caution in fully passing on higher rates to certain customers in view of potentially burdensome debt servicing costs, particularly given the challenging macroeconomic conditions. Funding costs will be less responsive to higher interest rates as a high proportion of customer deposits at most banks is in current and savings accounts. As a result, NIMs will widen markedly in 2024.

RELATED

BetKing Promotes Social Impact At NSF

BetKing Promotes Social Impact At NSF

20 hours ago
Sallah: UNYF felicitates with muslims, decries worsening living conditions

Oxfam Urges Nigerians To Embrace Responsible Plastic Use

20 hours ago

“The sharp increase in the CRR requirement in February will not have a significant impact on NIMs as many banks’ CRRs were already close to 45 per cent and low-yielding CBN-issued special bills have been repaid in the form of cash reserves. Nevertheless, the high CRR requirement is a significant constraint on NIMs, and further increases could exacerbate the impact,” it pointed out.

Noting that banking sector loan quality risks remain elevated due to the large devaluation of the naira, Fitch stated that, “higher debt servicing costs will add to existing loan quality pressures but we expect pre-impairment operating profits, which will benefit from wider NIMs, to be sufficient to absorb higher loan impairment charges given that net loans were just 35 per cent of domestic banking sector assets at end-3Q23.”

Meanwhile, it noted that, despite the clearing of the foreign exchange backlog, foreign exchange “pressures persist due to negative real interest rates and low forex market confidence. Tighter monetary policy and the CBN’s progress in clearing the backlog of FX forwards has driven a modest recovery in the naira, to about N1,300/$ on 27 March from about N1,600/$ at end-February.

“This has caused foreign-currency risk-weighted assets to deflate in naira terms and provided some support to the banking sector’s capitalisation. Fitch expects the CBN to continue tightening policy in the near term. However, naira depreciation risks, and therefore risks to the banking sector’s capitalisation, remain given that interest rates are still negative in real terms and it will take time for investor confidence to return fully to the forex market.”

Meanwhile, in response to the MPR and Cash Reserve Ratio (CRR) increases by the CBN, the National President of NACCIMA, Dele Oye, advised that the CBN’s policies should be recalibrated towards addressing the excess liquidity primarily stemming from the public sector’s borrowing habits and expenditure.


We’ve got the edge. Get real-time reports, breaking scoops, and exclusive angles delivered straight to your phone. Don’t settle for stale news. Join LEADERSHIP NEWS on WhatsApp for 24/7 updates →

Join Our WhatsApp Channel

START EARNING US DOLLARS as a Nigerian ($35,000) monthly. Companies are sacking their workers due to AI (artificial intelligence), business owners are in panic mode. Only the smart will make it. Click here


SendShareTweetShare
Previous Post

Euro 2024: UEFA Open To Bid For 26-man Squads

Next Post

I Almost Killed Myself After 2022 World Cup – Richarlison

Bukola Aro-Lambo and Adegwu John

Bukola Aro-Lambo and Adegwu John

You May Like

BetKing Promotes Social Impact At NSF
Business

BetKing Promotes Social Impact At NSF

2025/06/06
Sallah: UNYF felicitates with muslims, decries worsening living conditions
Business

Oxfam Urges Nigerians To Embrace Responsible Plastic Use

2025/06/06
Airtel Expands Digital Ecosystem With In-App Shopping Platform
Business

Airtel Expands Digital Ecosystem With In-App Shopping Platform

2025/06/06
NES Demands Stakeholder Collaboration To Curb Plastic Pollution
Business

NES Demands Stakeholder Collaboration To Curb Plastic Pollution

2025/06/06
AFN Board Members Write Minister, Lament Crisis Under Okowa’s Leadership
Business

FG Reaffirms Global Leadership In Entrepreneurship At 2025 GEC

2025/06/06
CSOs Hail Komolafe’s ‘Giant Strides’ As NUPRC Boss
Business

2024 Bid Rounds Violated No Oil Licencing Guidelines – Komolafe

2025/06/06
Leadership Conference advertisement

LATEST

ACF Mourns Uwais, Describes Ex-CJN Jurist Of Repute

Tolu Arokodare On Target As Super Eagles Share Spoils Against Russia

Godly Parenting Summit To Empower Parents For Brighter Future

Eid-al-Adha: No Nation Rises Without Unity, Sacrifice — Shettima

Makinde Advocates 6-year Single-term For Political Office Holders

Fire Guts Section Of Kano Phone Market On Eid Day

Hardship: El-Rufai, Amaechi Owe Nigerians Apology — Shehu Sani

Raphinha Named 2024/2025 La Liga Player Of The Season

Benue Gov’t Directs Residents To Vacate Flood-prone Areas

Gabriel Signs New Long-term Deal At Arsenal 

© 2025 Leadership Media Group - All Rights Reserved.

No Result
View All Result
  • Home
  • News
  • Politics
  • Business
  • Sport
  • Health
  • Entertainment
  • Opinion
    • Editorial
  • Columns
  • Football
  • Others
    • LeVogue Magazine
    • Conferences
    • National Economy
  • Contact Us

© 2025 Leadership Media Group - All Rights Reserved.