(Bloomberg) -- Guaranty Trust Holding Co., Nigeria’s biggest bank by market value, posted its biggest first-half profit as income from loans soared on the back of record interest rates.
The Lagos-based lender reported net income surged to 899.9 billion naira ($543.7 million) in the six months through June from 278.5 billion naira a year earlier, according to a filing to the Nigerian stock exchange. Net interest income more than doubled to 491.5 billion naira, as the amount set aside for bad loans almost halved to 47.4 billion naira.
Nigerian lenders are benefiting from an 800 basis-point increase in official borrowing costs since Olayemi Cardoso took over as central bank governor in September 2023. He’s hiked the benchmark rate to 26.75% to rein in inflation that’s exceeded 30% and to support the naira after the liberalization of the nation’s foreign-exchange market.
The tightening in monetary policy drove banks to reprice loans to as much as 29% per annum.
A steep depreciation in the naira over the past year also helped boost lenders’ profits as they converted dollar assets to a weaker domestic currency. That led the government in July to announce a 70% windfall tax on foreign-exchange gains.
Guaranty plans to take advantage of its diversification into general financial services and operations in West and East Africa as well as in Europe to mitigate challenges in its domestic market and further boost income, according to Chief Executive Officer Segun Agbaje.
You can follow Bloomberg’s reporting on Africa on WhatsApp. Sign up here.
©2024 Bloomberg L.P.
