Nigerian banks brace up for slower revenue growth

16 February 2015, Lagos – As the market awaits the 2014 full year financial results of deposit money banks, a financial market analyst has predicted slower revenue growth for the industry as a result of the unease about the economy.

The Nigerian economy has been severely affected by the fall in crude oil price.

Bismarck Rewane,

Mr. Rewane

To the Managing Director/Chief Executive Officer, Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, banks’ 2014 earnings would not be as high as the previous year.
“The results are not going to be much better than last year’s own. That is because when there is economic situation, everybody is affected. So, it is just a slowdown.

“We went through this in 2007. I am not saying they will lose money, but their profits won’t be as high as that of last year. But let us not mistake the slowdown for a crisis,” he explained.

According to him, the industry non-performing loans would increase this year, but he maintained that Nigerian banks are adequately capitalised to withstand any shock.

“The decline in crude oil prices will not affect the banks. That is a fiscal crisis and not a banking crisis. Fiscal crisis means that the government doesn’t have enough money, so payment of contractors will be delayed. That is, instead of being paid this month, they will be paid next month or the month after,” he said.

Commenting on the performance of the stock market, the FDC boss argued that the downturn in the market was as result of the exit of some international investors, adding that after a while, the market would get its fair value and begin to appreciate.

“This is the right time to come into the market, but investors need courage and money and a lot of people don’t have the courage, neither do they have the money to invest.

“If you have the two, then you are good to go. But those who have money don’t have the courage and those who have courage, don’t have money. There are very few people that have both.

“So, you need the two Cs, which is courage and cash to play in the stock market at this time.  Warren Buffet said the rules of investing in the stock market, rule number one: don’t lose money; rule number two: do not forget rule number one,” he said.

He predicted that the stock market would appreciate after the 2015 elections.

Pan-African rating agency, Augusto & Co recently forecast that this year, non-performing loans (NPLs) in the Nigerian banking Industry would increase to 11.6 per cent, which will be far above the Central Bank of Nigeria’s (CBN’s) five per cent benchmark.
Analysts at Agusto and Co based their prediction on the impact of the fallen oil prices and the naira devaluation.


– This Day

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