In response to the Central Bank of Nigeria’s hawkish monetary stance, Johnson Chukwu, CEO of Cowry Asset Management, said that more local lenders are likely to pursue cross‑border expansion. Speaking at a virtual webinar titled “Nigeria’s Economic Landscape,” organized by Cowry Asset Management, Chukwu explained that the cumulative 6.5 percent hike in the benchmark interest rate has pushed lending yields higher and eroded banks’ net interest margins. This pressure, he argued, will drive Nigerian banks to seek opportunities in other African markets. “We project more Nigerian banks to adopt cross‑border expansion and benefit through risk diversification and greater profit opportunities for shareholders,” he said.
Chukwu noted that banks are restructuring to diversify their revenue bases and stay competitive with other financial‑service providers. He highlighted the growing adoption of HoldCo structures by many local lenders as a way to counter increasing competition from fintech firms, either by developing more fintech products internally or by partnering with and investing in fintech companies. “The transition to HoldCo structures will give Nigerian banks more leverage to diversify their earnings in the face of the present tight monetary‑policy regime, thus enhancing their topline,” he explained. Zenith Bank and Sterling Bank have recently received approvals in principle to convert to HoldCos, joining FBN Holdings, Stanbic IBTC Holdings, FCMB Group and GTCO, which already operate HoldCo structures as NGX‑listed banks.
The banking sector has recorded a positive year‑to‑date performance of 8.5 percent. Chukwu cited United Bank for Africa (UBA) as an example of successful diversification: in 2023, 63 percent of UBA’s profit before tax came from its operations in 21 African countries. He added that the sector’s growth has also been fueled by a surge in electronic transactions and the availability of multiple payment options.
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