Just over a year ago, we examined how Nigeria’s worsening macroeconomic landscape threatened the performance of Nigerian banks in Q1 2022. With fears of a recession fresh on the horizon, we spotlighted the impact of high inflation, rising interest rates and exchange rate devaluation on banks’ financials. The conclusion was that despite these downside risks, the Nigerian banking sector had what it takes to survive another recession.
Fast forward to Q2 2022, we explored the impact of rising regulatory costs such as monthly Cash Reserve Ratio (CRR) debits and the Asset Management Company of Nigeria (AMCON) levy on Nigerian lenders’ in H1 2022. We saw how rising inflation and these regulatory costs eroded bank profitability and shareholder value.
Cue 2023, the uncertainty in Nigeria's operating environment has been unprecedented. Policies like the botched naira redesign that saw currency in circulation hit its lowest in 14 years, persistently rising