Data released by the Nigeria Inter-Bank Settlement Systems (NIBSS) has revealed that licensed mobile money operators collectively processed transactions valued at an astonishing N46.9 trillion in 2023.
This indicates a staggering 141.5 per cent increase compared to the N19.4 trillion transactions recorded across mobile money platforms in the preceding year, 2022.
This substantial figure represents the highest annual mobile money transaction value in the country, showcasing the dynamic expansion of the mobile financial ecosystem.
Notably, the volume of mobile money transactions also experienced an extraordinary surge, demonstrating a remarkable 326 per cent growth in the year under review. In 2022, the country witnessed a total of 714 million mobile transactions. Contrastingly, in 2023, an impressive 3.04 billion mobile money transactions were recorded, underscoring the escalating reliance on mobile financial services.
A breakdown of the monthly transactions showed that the year commenced with a robust start, with mobile money transactions amounting to N2.37 trillion.
February continued the upward trajectory, with transactions reaching N2.56 trillion, showcasing sustained momentum.
March marked a significant uptick, recording transactions valued at N4.14 trillion, indicating a notable surge, April maintained the strong trend, with transactions totalling N3.65 trillion, reflecting consistent growth while May saw a further increase, with transactions totalling N3.74 trillion.
June recorded transactions amounting to N3.67 trillion, July showcased robust activity, recording transactions valued at N3.81 trillion and August maintained the upward trajectory, with transactions reaching N4.02 trillion.
September sustained the positive trend, recording transactions totalling N4.09 trillion, as October witnessed heightened activity, with transactions amounting to N4.48 trillion. As the year was rounding up, November recorded transactions reaching N4.65 trillion and the year concluded on a high note, with December transactions surging to N5.69 trillion, marking a strong finish to 2023.
A further breakdown into 2022 transactions showed that the year kicked off with mobile money transactions amounting to N1.05 trillion in January 2022. February continued the positive trend, witnessing transactions reaching N1.09 trillion, March marked a notable uptick, with transactions valued at N1.34 trillion, showcasing increasing momentum.
April maintained the growth trajectory, recording transactions totaling N1.38 trillion while May saw consistent activity, with transactions reaching N1.37 trillion, indicating sustained growth.The upward growth continued in June with transactions amounting to N1.47 trillion. July showcased continued momentum, recording transactions valued at N1.55 trillion and August witnessed heightened activity, with transactions surging to N1.84 trillion.
September sustained positive growth, recording transactions totalling N1.72 trillion, October witnessed significant activity, with transactions amounting to N2 trillion. November recorded transactions reaching N2.1 trillion and the year concluded with strong figures in December, as transactions surged to N2.49 trillion, marking a robust finish to 2022.
FBN Holdings, Five Other Banks’ Interest on Loans to Customer Rise by 53.3%
Following the Central Bank of Nigeria (CBN) hike in its Monetary Policy Rate (MPR) to 18.75 per cent, FBN Holdings Plc, and five other banks declared 53.3 per cent increase from interest on loans & advances to customers in 2023.
This is a sum of N1.71 trillion interest income from loans & advances to customers in 2023 against N1.11 trillion declared by the six banks in 2022.
Other banks include: Stanbic IBTC Holdings Plc, Wema Bank Plc, Sterling Financial Holdings Company Plc, and FCMB Group Plc, as Access Holdings, United Bank for Africa Plc (UBA) Plc, Zenth Bank Plc, and Ecobank Transnational Incorporated (ETI) have not announced unaudited/audited result and accounts for full year ended December 31, 2023.
MPR is the baseline interest rate in an economy, every other interest rate used within an economy is built on it.
The apex bank in July 2023 raised its benchmark interest rate to 18.75 per cent from 18.5 per cent in a bid to curb inflation. In January, the MPC of CBN raised its benchmark lending rate from 16.5 per cent to 17.5 per cent in a sustained push to control inflation and ease pressure on the naira.
The annual inflation rate rose to 28.92 per cent Year-on-Year (YoY) in December 2023, reflecting continued increase in prices of goods and services across the country, according to National Bureau of Statistics (NBS).
With the increase in MPR, money market indicator of CBN revealed that the average prime lending rate moved to 14.17 per cent in December 2023 from 13.85 per cent in December 2022.
A prime rate or prime lending rate is an interest rate used by banks, usually the interest rate at which banks lend to customers with good credit.
However, the maximum lending rate in the banking sector dropped to 26.62per cent in December 2023 from 29.13 per cent reported by CBN in December 2022.
Maximum lending rate refers to the rate charged by banks for lending to customers with low credit rating.
Analysis of the banks’ unaudited result and accounts for full year ended December 31, 2023 revealed that FBN Holdings declared N600.83 billion interest income from loans & advances to customer in 2023, representing an increase of 48.86 per cent from N403.62 billion in 2022, while Fidelity Bank declared N363.75 billion interest income from loans & advances to customer, a growth of 57.5 per cent from N230.95 billion reported in 2022.
As FCMB Group declared N272.66 billion interest income from loans & advances in 2023 an increase of 56 per cent from N174.7 billion in 2022, Stanbic IBTC Holdings reported a significant increase of 91.37 per cent increase from loan to customers in 2023 from N119.96 billion to N229.58 billion in 2023.
In the period under review, Sterling Financial Holdings Company posted N123.46billion interest income from loans, a growth of 22.9 per cent from N100.44billion reported in 2022 as Wema Bank declared N118.28 billion interest income from loans in 2023, representing a growth of 39 per cent from N85.07 billion in 2022.
The six Deposit Money Banks (DMBs), however, declared N15.03 trillion loans to customers in 2023, representing an increase of 57.13 per cent from N9.56 trillion in 2022.
FBN Holdings leads other banks in loans to customer, announcing N6.36 trillion as of December 31, 2023 from N3.79 trillion reported in 2022 financial year.
Analysts expressed that the average lending rate in the banking sector has increased amid a hike in MPR to 18.75 per cent this year.
Analysts at Afrinvest Research have expressed that the CBN’s Monetary Committee Policy (MPC) this month may increase its benchmark policy rate further by at least 25 basis points to 19 per cent.
According to Afrinvest Research, “Given the sustained surge in price level since the last MPC meeting in July 2023 which largely defy the CBN’s goal, we hold that the benchmark policy rate (MPR) might be further hiked by at least 25basis points to 19per cent in the Q1 before considering a dovish tilt in the second half, contingent on the trajectory of other key macroeconomic parameters and the direction of interest rates in major economies.”
Afrinvest Research stated that outlining the basis for January inflation outlook alongside the implications of price trends on interest rate.
The Director/Chief Executive Officer · Centre for the Promotion of Private Enterprise (CPPE), Mr Muda Yusuf in a chat with THISDAY stated that the 18.75 per cent MPR are the investors in the real economy and other entrepreneurs in the economy.
He said the MPR at 18.75 per cent is another additional burden on business as it will result in a spike in cost of credit.
According to him, “Interest rate on loans will increase, production costs will increase, sales will drop, profit margins will shrink and investors’ confidence will be negatively impacted.”
He urged the CBN to pay greater attention to financial system stability at this time.
“Recent developments in the global financial system underscores the imperative of cautious interest rate hikes,” he added.
The Chief Research Officer, InvestData Consulting Limited, Mr. 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. A hike in interest rate is often considered a manufacturers’ nightmare as it stifles productivity and expansion.”