MPR:  Five Banks Raked N2.22trn from Lending to Customers in H1

Kayode Tokede

On the back of Monetary Policy Rate (MPR), currently at 27.5 per cent, Ecobank Transnational Incorporated and four other financial institutions generated N2.22 trillion from lending to their customers in the half year ended June 30, 2025.

This is about 40per cent increase over N1.58 trillion generated for the same period ended June 30 2024. 

The remaining financial institutions are:  First Holdco Plc, Wema Bank Plc, FCMB Group Plc and Sterling Financial Holdings Company Plc.

This excludes giants like Zenith Bank Plc, Fidelity Bank Plc, Guaranty Trust Holding Company Plc, among others who earlier released their audited result following the Central Bank of Nigeria(CBN) approval.

In the period under review, interest rate in Nigeria steadied at 27.5 per cent as the CBN double its effort at tackling double-digit inflation rate.

While the average global lending rate sits below 10per cent, many African economies have interest rates far above 20 per cent where the likes of Ecobank Transnational Incorporated and First Holdco have branches.

This creates a tough environment for businesses and customers who need access to credit.

In countries where inflation is high or the local currency keeps losing value, central banks often respond by raising interest rates. This makes borrowing more expensive but is seen as a way to protect the economy. However, this approach also comes with downsides: it slows down growth and limits job creation.

In oil-producing countries like Nigeria and Angola, high interest rates continue despite strong export revenues. In others, like Zimbabwe and Ghana, weak currencies and rising prices are major drivers.

A breakdown of the five banks’ result showed that Ecobank Transnational Incorporated declared N750.59 billion interest  on loans to customers in H1 2025,  about 17.08 per cent increase over N641.08billion in H1 2024 while First Holdco posted N910.32 billion interest income from loans to customers in H1 2025, representing an increase of 60.01 per cent from N568.9billion declared in H1 2024. 

On its part, FCMB Group announced N299.15billion interest income from loans and advances to customers in H1 2025, up by 55 per cent from N192.46billion reported in H1 2024.  Wema Bank reported N141.01 billion interest income on customers loans in H1 2025, about 49.6 per cent hike over N94.25billion reported in H1 2024.

In addition, Sterling Financial Holdings Company posted N115.42billion interest on loans in H1 2025, representing an increase of 35.95 per cent from N84.9billion in H1 2024. 

Cumulatively, the five financial institutions announced N3.79trillion interest income in H1 2025, representing an increase of nearly 40 per cent from N2.72 trillion declared in H1 2024. 

Interest income is made up of cash and cash equivalent, loan and advances to customers/banks, and investment securities.

A further analysis showed that the five financial institution declared  N1.48 trillion interest expenses in H1 2025, about 22.8 per cent increase over N1.21trillion declared in H1 2024.

Analysts have attributed the increase in interest income and expenses to the reflection of hike in interest rate in most African countries since 2024.

In Nigeria, the CBN Governor, Dr. Yemi Cardoso, had noted that the committee, however, acknowledged underlying inflationary pressures driven largely by high electricity prices, persistent foreign exchange demand pressure and other legacy structural factors.

According to him, the committee noted new policies introduced by the Federal Government to boost local production, reduce foreign currency demand pressure, and thus, lessen the pass-through to domestic prices.

Speaking to THISDAY, Investment Banker & Stockbroker, Tajudeen Olayinka said, the current high interest rate regime in Nigeria is the outcome of a deliberate policy of the central bank to encourage foreign inflows into Nigeria from foreign portfolio investors, in a way to increase accretion to foreign reserves and stabilize exchange rate of the Naira.

He explained, “This is the reason for rising interest rates in the economy, with continued repricing of securities across markets and instruments, including loans and advances by banks. So, the high interest rate regime will remain with us for as long as it takes CBN to achieve its exchange rate and inflation objectives.”

Analysts at Cordros Research, commented,“Under the new CPI methodology, the current inflation rate suggests a return to positive real interest rates. However, challenges in interpreting inflation dynamics under the rebased CPI framework are likely to remain a key concern for the MPC.

“In our view, inflation risks are tilted to the upside, particularly as the naira continues to experience gradual depreciation, reinforcing the need to anchor inflation expectations.Moreover, the MPC is expected to weigh the implications of heightened global uncertainty and the persistence of elevated global interest rates, which justify the need to preserve interest rate differentials and limit capital outflows.

“In this context, a rate cut—especially against the backdrop of weaker oil prices and fragile investor sentiment—could undermine foreign investor confidence.Accordingly, we expect the MPC to maintain a cautious stance by holding the MPR at 27.50 per cent and leaving all other policy parameters unchanged.”

Analysts at Cordros Research had at the end of the MPC meeting in July 2025, noted that the committee’s decision to maintain the policy rate came in contrast to our expectation of a shift toward monetary easing.

They added that the committee’s stance was largely influenced by persistent inflationary pressures, particularly the uptick in food and core inflation in June, despite continued moderation in headline inflation, as well as existing global uncertainties.

“These underlying pressures prompted the MPC to hold the policy rate steady as part of efforts to contain inflation and reinforce the ongoing disinflationary trend.Looking ahead, the MPC anticipates further moderation in inflation, supported by its current monetary policy stance, relative exchange rate stability, easing petrol prices, and the expected impact of the main harvest season in Q4-25 on food inflation.

“Nonetheless, we believe the pace and consistency of disinflation will remain the key determinant of future policy decisions. Should headline inflation and key CPI sub-components remain volatile without a clear and sustained downward trend, the MPC is likely to keep the MPR unchanged in the near term.

“Additionally, while global market volatility has eased, persistent trade tensions continue to weigh on the global economic outlook, contributing to a more cautious approach to monetary policy easing across advanced and emerging economies. This may further support the MPC’s decision to maintain elevated interest rates to sustain carry trade opportunities,” they added.