Why Carbon published first ever financial accounts that showed biggest profit in 7yrs

Financial technology is booming in risk-saturated Nigeria, prompting big lenders to revert to the personal loan space which has been dominated by nimble fintech companies.

Banks are turning their attentions to the personal loan space after years of abandon and the general feeling is that they can successfully take on the fintech companies for market share, thanks to more superior liquidity levels and ability to mobilise cheap funds.

Fintechs don’t have the luxury of mobilising cheap funds, which means their cost of capital dwarfs that of the banks. That’s the reason why their interest on loans given to people ranges between 3 to 4.5 percent monthly compared to the 1.75 percent that Guaranty Trust Bank for instance offers for personal loans.

The lifespan of fintech companies in Nigeria is largely dependent on their liquidity profile and ability to issue fresh loans at lower interest rates. While the latter appears feasible, the former poses a big threat as their latest competitors possess strong liquidity base to embark on aggressive loan offerings at fintechs’ expense.

As a result of this and in a renewed drive for business expansion, fintech firms are in the hunt for capital injections, according to sources familiar with the matter.

By improving their liquidity levels, they are in a better position to compete.

The first sign of the fintechs’ capital ambitions came last week when Carbon, formerly Paylater, made its financial results public in 2018 for the first time since it began operations in 2012 and after it turned profitable with an aftertax profit of N180 million from a disappointing 2017.

“Last year was a pretty good one for the Carbon team. We saw 300+% growth across existing/new products and improved business profitability,” the company stated in a tweet while unveiling the results. “Today, we’re sharing our 2018 financial report so you can view our key annual results.”

With Carbon’s 2018 stellar performance and its public disclosure of financial performance, the company has shown the public that fintech is a profitable business in Nigeria, these developments could attract investors seeking fintechdriven businesses operating in Africa’s most populous nation to invest in.

The prospects are evident as the financial digital services firm consistently grew its gross earnings since it was established to reach