Photographer: KC Nwakalor/Bloomberg
Photographer: KC Nwakalor/Bloomberg
Signal as much as our Subsequent Africa publication and comply with Bloomberg Africa on TwitterThe financial downturn in Nigeria is forcing the nation’s lenders to rewrite their enterprise plans.
A scarcity of {dollars} and declining demand for credit score, together with a plunge in home bond yields, have taken a toll on their backside strains. A lot of the nation’s largest banks, together with Warranty Belief Bank Plc, United Bank for Africa Plc and Entry Bank Plc, reported revenue declines in first half. Cairo-based EFG-Hermes Holding SAE forecasts decrease trade revenue in 2020 in comparison with a yr in the past.
Right here’s how a few of the nation’s largest banks are confronting the troubles spawned by Covid-19 and the drop in oil costs.Warranty Belief BankNigeria’s largest lender by market value mentioned final week it is going to transition to a holding firm subsequent yr to permit diversification to scale back reliance on banking.It plans to determine items in insurance coverage, asset administration, funds and pensions. It additionally plans to separate the banking division into 4 subsidiaries masking Nigeria, West Africa, East Africa and the UKIt’s partnering with Leadway Assurance Co. Ltd. to spice up gross sales of insurance coverage merchandise.Story: Warranty Belief to Create Holding Firm, Cut up Banking Enterprise
VIRUS WOES
GTBank’s revenue falls as downturn weighs on operations
Supply: Bank’s statements on web site
Entry Bank Nigeria PlcThe nation’s largest bank by belongings is increasing all through Africa. It plans to open a unit in Mozambique within the second half and in Guinea subsequent yr. Earlier this yr, it opened a unit in Cameroon and acquired Transnational Bank Ltd. in Kenya.The lender is executing a five-year plan to be “Africa’s gateway to the world” by growing its presence within the continent.Story: Nigeria’s Entry Bank to Open Unit in Guinea Subsequent Yr, CEO SaysUnited Bank for Africa PlcThe lender, which already operates in 20 African international locations, is pushing for items outdoors its house market to offer a “buffer” for earnings, in response to Chief Monetary Officer Ugochukwu Nwaghodoh.United Bank mentioned in 2018 it expects contributions from international branches to its revenue to extend to a half by subsequent yr from 45 %.It has invested greater than $100 million in items within the Democratic Republic of Congo, Benin, Ivory Coast, Tanzania and Mozambique to assist them broaden and cushion challenges within the house market, Nigeria.Story: Nigerian Bank UBA Sees African Models Making Up 50% of ProfitStanbic IBTC Holding PlcFBN Holdings PlcAfter promoting its insurance coverage unit to bolster capital, FBN deployed the 25 million naira in proceeds to broaden retail franchise — First Bank Nigeria — and strengthen its on-line presence.It recruited store house owners in areas with decrease bank penetration to undertake monetary companies, together with account openings, cash transfers and funds on its behalf. By way of the retailers, or brokers as they’re identified, it elevated the value of company transactions to five.71 trillion naira in first half from 1.61 trillion naira a yr in the past. Agent banking contributions to e-business income rose to 20.3% in June from 13.9% yr in the past whereas low-cost deposits at First Bank accounted for 87.2% of whole deposits in first half from 85.7% in December, helped by company banking.Story: FBN Holdings Divests Stakes in Insurance coverage BusinessZenith Bank PlcZenith Bank Plc, primarily a company lender, is shifting to construct a retail franchise.The lender began so-called company banking final yr and achieved phenomenal progress in value and quantity of transactions within the first half. It shares fee with the retailers or brokers.The value of transactions on the company banking platform rose to 226 billion naira within the six months via June in comparison with 56.2 billion naira June to December 2019 whereas transaction quantity was 22.1 million within the first six months of 2020 from 7.5 million June to December final yr.
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