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Q1 ended 2 years of thick spread between bank deposits, rates on risk-free papers—Jimoh

The Managing Director/Chief Executive Officer of Coronation Merchant Bank Group, Mr. Abu Jimoh has revealed that signals from Q1 2018 results of banks have shown that it is all over for the two-year period when Nigerian banks could earn thick spreads between their deposits and the rates available on risk-free government paper.  So, it is not a surprise to see interest income under pressure.

In an interview, he said “Going into Q2 2018, I believe there will be a trend reversal as all Nigerian banks are facing a decline in interest income in 2018 as interest rates on government-issued T-bills and bonds continue to decline”. 

It would be recalled that the loan book growth in the banking sector is quite low at the moment owing to the recent recession and lender’s focus on treasury bills.

The way out of this problem is for banks to make more customer loans to the private sector, where spreads are still available.

However, according to him, “not all banks have sufficient capital to do this in 2018. Following Nigeria’s exit from recession and the recovery of global commodity prices principally crude oil, we are seeing increasing credit / lending opportunities in the consumer, agriculture, industrials, oil & gas and retail segments of the economy”.

On the vision of Coronation Merchant Bank Group to become Africa’s premier investment bank, Jimoh noted that “Although the bank is still very young, we are embarking on a remarkable ongoing transformation journey that will see us emerge as one of the Africa’s leading investment banks from our current position. So far, I believe we have made considerable strides on our journey towards becoming a foremost African investment bank especially when compared to where we started from. We are committed to this vision and we are confident that we have the requisite people and resources to convert this vision into reality.

He said “In the meantime, we will focus on the Nigerian market and leverage our robust distribution network and strategic alliances to provide high quality services across West Africa and beyond. Sub-Saharan region retains significant potential for growth, supported by favorable long-term macroeconomic and demographic factors.

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