Access Holdings, ETI, Others See 52% Increase in Interest Expense as Customers’ Deposit Soar

Nigeria’s tier 1 & tier 2 Deposit Money Bank (DMBs) saw a combined 52 per cent increase in interest expense on customers’ deposits to N372.45 billion in first quarter (Q1) ended March 31, 2022 from N245.53 billion reported in Q1 2021.

The tier 1 DMBS are; Access Holdings Plc, Ecobank Transnational Incorporated (ETI), United Bank for Africa Plc (UBA), Zenith bank Plc, Guaranty Trust Holding Plc (GTCO) and FBN Holdings Plc.

Tier 2 DMBS are; Fidelity Bank Plc, Unity Bank Plc, Union Bank for Nigeria Plc, Wema Bank Plc, Sterling Bank Plc, FCMB Group and Stanbic IBTC Holdings Plc.

The Central Bank of Nigeria (CBN) ‘money market indicators’ data showed a 0.03 basis points increase in saving deposit to 1.28 per cent in March 2022 from 1.25 per cent reported in January 2022.

According to the apex bank, interest on one-month deposit in Year-on-Year performance moved to 3.33 per cent as of March 31, 2022 from 2.06 per cent reported in March 2021, while interest on three-month deposit gained 1.36 basis points to 4.41 per cent as of March 31, 2022 from 3.05 per cent reported in March 2021.

Extracts from unaudited financial result and accounts of listed DMBs on the Nigerian Exchange Limited (NGX) revealed that Access Holdings with its expansion in over 10 African countries, the UK and UAE with three representative offices in China, India and Lebanon paid the highest interest on customers deposit in the period under review.

Access Holdings reported 73.22 per cent increase in interest expenses to N86.33billion in Q1 2022 from N49.84billion in Q1 2021.

This represents an increase of 73 per cent, driven primarily by interest expenses paid to customers with savings accounts. Interest expenses on saving accounts customers moved to N53.84 billion in Q1 2022 from N21.03 billion reported in Q1 2021.

Meanwhile, Access Holdings grew its deposit to N7.49 trillion as of March 31, 2022, representing an increase of 7.5 per cent from N6.95 trillion reported in 2021 full year results.

ETI’s interest expenses also grew by 29.8 per cent to N56.83 billion in Q1 2022 from N43.76 billion in Q1 2021, while UBA reported 17.5 per cent growth in its interest expenses to N40.21 billion in Q1 2022 from N34.21 billion reported in Q1 2021.

Interestedly, Fidelity Bank and Wema Bank grew interest expenses on customers deposit by 124.29 per cent and 95.23 per cent respectively in Q1 2022, the highest percentage reported by the 13 banks, according to THISDAY findings.

As Fidelity Bank reported N31.99billion interest expanses on deposit from customers in Q1 2022 to N14.27billion in Q1 2021, Wema Bank reported N14.95billion interest expenses on deposit from customers in Q1 2022 from N7.66billion reported in Q1 2021.

Analysts attributed the growth to increase in deposits from customers on the heels of CBN’s 65 per cent