NGX | Nigeria : Banking Sector Outlook 2023 - Foraging in value

Given the heightened volatility across financial markets, driven by geopolitical developments and monetary policy responses to inflation and currency pressures, we believe FY’23 presents a new opportunity for Nigerian banks to reimagine or consolidate go-to-market strategies. Even as banks have demonstrated resilience in light of post-pandemic externalities, we see renewed threats from stricter regulatory environments, political risks, and nimbler fintech competition. Against this backdrop, we assess our coverage banks’ exposures and readiness to mitigate these risks through their diversification footprints and by embracing digital technologies for scale.

Fiscal indicators and the recent body language of the monetary authorities suggests that yields are likely to rise in 2023. The implication for domestic money banks is the continued repricing of assets higher in tandem with market realities. Indeed, our analysis revealed that our coverage asset yields have risen 2.1 ppts since Q1’21. During the same period, banks’ interest incomes have grown by 11.0% on average, improving interest income contribution to gross earnings to 74.1% from 69.4%.

 

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CardinalStone is a full service investment banking firm with a vision to build a world class investment banking firm of African origin; operating out of Lagos, Nigeria. The firm was incorporated in April 2008 and began operations in June 2008. CardinalStone is duly registered with the Securities & Exchange Commission in Nigeria to carry on business as an Issuing House, Fund Manager and Broker/Dealer The Firm's activities are carried out across five business units: Asset Management, Investment Banking, Private Equity, Securities Trading and the Business Support Group.
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