Fitch warns Nigerian bank on slower profits in 2018

Fitch Rating agency has warned that Nigerian banks will struggle to sustain the same level of profitability this year due to reduction in government borrowing through treasury bills (T-Bills).
Last year the federal government introduced a new debt strategy designed to refinance some of its maturing domestic debt with external borrowing. 
Consequently, the Debt Management Office (DMO), last month used proceeds of the $500 million Eurobond offer, issued in November to repay N198 billion worth of T-Bills, which matured during the month. Also the T-Bills’ issuance calendar for the first quarter
Also the T-Bills’ issuance calendar for the first quarter of this year (Q1 2018) issued by CBN, showed N200 billion difference between the N1.2 trillion worth of T-Bills scheduled to mature during the quarter and the N1.1 worth of T-Bills to be issued during the quarter, indicating lower borrowing from government.
This development, according to Fitch, may affect 30 percent of banks’ interest income in the 2018 financial year.
In a statement issued, Fitch said, “The slowdown in T-bill issuance marks a change of strategy as the government looks to increase its financing from external sources and longer-dated domestic issuances. 
Record T-bill issuance in 2017 helped support the Central Bank of Nigeria’s strategy to maintain naira exchange-rate stability.

Leave a Reply

Your email address will not be published. Required fields are marked *