H2 expected to be benchmark period for Nigerian banking sector - CNBC Africa

H2 expected to be benchmark period for Nigerian banking sector

Western Africa

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“The environment really is a bit different because the banks have to grapple with higher funding costs, which I think is significant for them. We’ve seen that already inch up in the first quarter of 2013. What we think could be very significant for the sector is some of the regulatory changes that kick in starting from this quarter,” ARM Investment Managers banking analyst Adeolu Omotola told CNBC Africa on Tuesday.

Banks now face a higher interest environment and a central bank that continues to emphasise risk management.

Banks have also seen changes in terms of control and charges, such as limitations on banking sms alerts and how banks can minimise such costs. Despite it being a security measure, banks are losing thousands of naira on sms alerts.

First Bank could be losing up to 4 billion naira for the year on sms charges alone. While it might not be a significant loss for such a large bank, such a cost would be severe on a smaller bank’s earnings.

“We think that we’re very much in the recovery phase for the banking sector as a whole. More importantly, we’re looking at a situation in which the banks are more operationally sound and better equipped to take advantage of opportunities within the system,” added to Omotola.

“One of the big things that we’re looking to was the power sector reform, which we thought would have provided a lot of revenue opportunities in spite of the fact that that has slowed down a bit coming into this year.”

Access Bank recently announced a five-year strategy plan and according to Omotola, the announcement was instrumental for consumers and customers to gauge the direction that can expected from the retail bank.

Retail banking has however seen a slow take off in Nigeria due to the poor infrastructural systems accommodating it.

 

 

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