Moody’s Says Nigerian Banks Diversifying, Expanding can withstand Global shocks

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Nigerian banks expanding into the rest of the continent or diversifying into other financial services will be better insulated from shocks than they were during the global financial crisis, according to Moody’s Investors Service.

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Lenders including Access Bank Plc and Guaranty Trust Bank Plc are following peers FBN Holdings Plc and Stanbic IBTC Bank to transition to financial holding companies that will protect their local banking assets from other businesses.

Access Bank plans to open a payments unit and increase its African footprint, while GTB is looking to establish subsidiaries in asset management.

Survival Strategies Pushing Banks in Nigeria Away From Lending

The Abuja-based central bank modified rules in 2010 after the global debt crisis and the abuse of client funds brought the industry to verge of collapse.

Here are some emailed comments from Peter Mushangwe, a banking analyst at Moody’s, on the new drive:

“Regulation this time will be tighter and regulators will ringfence local depositors and senior creditors.”

“In 2008 and 2009, Nigerian banks funded their non-banking activities using the deposits originated in their Nigerian operations.”

Nigerian banks usually expand into West Africa and Central Africa before moving to East Africa.

“Some of the neighboring countries have weaker operating conditions and regulations and therefore present risks.”

“However, due to the general low penetration and growing per-capita income, they also present long-term opportunities.”

“Diversification will create resiliency in both revenue generation capacity and asset quality for banks.”

“Nigerian banks are facing challenges in revenue growth due to the difficult operating environment.”

Godwin Okafor
Godwin Okaforhttps://naija247news.com
Godwin Okafor is a veteran Financial Journalist, Internet Social Entrepreneur, and the visionary Founder of Naija247news Media Limited. With an extensive career spanning over 16 years in financial journalism, Godwin possesses a wealth of experience that seamlessly bridges both traditional and digital media landscapes. His journey in journalism commenced at Business Day, Nigeria, where he laid the foundation for his prolific career. In 2010, Godwin took a bold step by founding Naija247news Media, a platform that has since become a prominent player in delivering timely and accurate news. Educationally, Godwin Okafor holds a Bachelor's degree in Industrial Relations and Personnel Management from the prestigious Lagos State University, Ojo, Lagos. His commitment to continuous learning led him to the Lagos Business School, where he further honed his skills. Additionally, he is recognized as a Fellow of the University of Pennsylvania, having successfully completed the Wharton Seminar for Business Journalists. Throughout his illustrious career, Godwin has earned acclaim by winning numerous journalism awards, a testament to his dedication to excellence in reporting. Beyond his role as a Financial Journalist, Godwin Okafor wears the hat of the Chairman at Emmerich Resources Limited, the publishing entity behind Naija247news. His visionary leadership has played a pivotal role in shaping the media landscape and establishing Naija247news as a trusted source of information. Godwin Okafor's multifaceted expertise, commitment to journalistic integrity, and leadership in the realm of business journalism underscore his influential presence in both the media and entrepreneurial spheres.

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