The Business NG - May 27, 2024

In this issue

"Nigeria's banking sector faces a challenging landscape in 2024, as higher interest rates are expected to impact loan asset quality and customers' ability to meet rising finance costs. Analysts note that bank loan defaults have increased in Q1 2024, with loan loss provisions rising in response to monetary policy tightening and federal fiscal borrowing rates crowding out private-sector credit. The Central Bank of Nigeria's recent 150 basis point increase in the Monetary Policy Rate (MPR) has led to higher interest rates on retail credit and increased loan repayment risks, as default rates rise. Local companies are struggling to cope with foreign exchange rate uncertainty and domestic interest rate increases, with second-tier Wema Bank reporting a rise in net interest income and loan loss provisions in Q1 2024, in anticipation of an increase in bad credits, in line with International Accounting Standards Board (IASB) rules. The banking sector is bracing for further impact from the policy rate rise."