Nigerian Banks Witness Surge in Deposits Amid Economic Challenges
In the first quarter of 2023, Nigerian banks saw a substantial increase in deposits, amounting to ₦21 trillion, bringing the total bank deposits to ₦136 trillion. This impressive growth was detailed in the Nigerian Exchange (NGX) report, which highlighted audited reports and regulatory filings by commercial banks and their holding companies. The total deposits in the banking sector rose by 63%, from about ₦70.5 trillion in 2022 to approximately ₦115 trillion in 2023 .
Growth Across Banking Tiers
The surge in deposits was observed across all tiers of banks, including middle-tier and newly established banks, which competed effectively with the first-generation and largest banks. For instance:
- Zenith Bank: Deposits increased by 69%, from ₦8.98 trillion in 2022 to ₦15.17 trillion in 2023, closing March 2024 at ₦16.78 trillion.
- Guaranty Trust Holding Company (GTCO): Deposits doubled from ₦4.6 trillion in 2022 to ₦7.55 trillion in 2023, reaching ₦9.2 trillion by the first quarter of 2024.
- United Bank for Africa (UBA): Deposits grew from ₦10.86 trillion in 2022 to ₦14.9 trillion in 2023, closing at ₦18.4 trillion in March 2024.
- FCMB Group: Deposits increased steadily from ₦2.07 trillion in 2022 to ₦3.4 trillion in 2023, and ₦3.7 trillion in the first quarter of 2024.
- Premium Trust Bank: Deposits surged by 382%, from ₦55 billion in December 2022 to ₦265 billion in December 2023, reaching ₦309 billion in the first quarter of 2024.
- Fidelity Bank: Deposits rose from ₦2.58 trillion in 2022 to ₦4.02 trillion in 2023, closing at ₦4.71 trillion in the first quarter of 2024.
- Access Holdings: Deposits jumped from ₦11.3 trillion in 2022 to ₦19.8 trillion in 2023, reaching ₦24.7 trillion by March 2024.
- Sterling Holding Financial Company: Deposits crossed the ₦2 trillion mark, reaching ₦2.15 trillion in the first quarter of 2024, up from ₦1.4 trillion in 2022 and ₦1.8 trillion in 2023 .
Implications for Lending and Economic Growth
The increase in deposits has facilitated enhanced lending to the private sector, particularly small and medium enterprises (SMEs), thereby supporting economic growth. A report by the Central Bank of Nigeria (CBN) indicated that banks’ credits to the private sector grew by ₦30 trillion within a year. Additionally, banks have recorded significant profitability growth in 2023, with average profit growth in double digits, largely driven by business expansions and gains from foreign exchange (forex) revaluation .
Factors Contributing to Deposit Growth
Experts attribute the rise in deposits to several factors, including:
- Foreign Exchange Revaluation: Banks strategically positioned themselves to attract foreign currency deposits, and the devaluation of the naira increased the value of these deposits when converted to local currency.
- Rising Interest Rates: Higher interest rates made deposits more attractive, contributing to the surge in deposit growth.
- Strategic Positioning: Banks have been adjusting their operations to align with the changes in the foreign exchange market, as directed by the CBN .
Conclusion
The significant increase in deposits among Nigerian banks in the first quarter of 2023 underscores the resilience and adaptability of the banking sector amidst a challenging macroeconomic environment. This growth not only enhances the banks’ lending capacity to the private sector but also contributes positively to the overall economic stability and development in Nigeria.
