This article highlights how much Nigerian Banks raked in from investing in Treasury bills in the first 9 months of 2017.
The 2017 9 months results of tier one Nigerian banks, comprising FBN Holdings, UBA, GT Bank, Access and Zenith (FUGAZ,) showed a combined earnings of about N451.8 billion from treasury bills and government bonds, compared to N270 billion earned same period in 2016.
The top 5 banks made a combined N1.4 trillion in interest income for the first 9 months of the year, compared to N1.1 trillion in the same period in 2015. In summary, 33% of bank interest income was from Treasury Bills and Government Bonds compared to 25% in the same period in 2016.
In 2017, Nigerian banks increased purchase of government securities against increasing loans to the private sector. Government securities have offered yields in excess of 18% for the year as government increases reliance on local borrowing to fund the Federal Budget as well as plug its deficit. Government is now considering borrowing in cheaper foreign currency and reducing its more expensive local debts.
FBN Holdings reported that it earned N356 billion in interest income in the first 9 months of the year out of which N120 billion was from income in government securities. The bank earned N74 billion in income from government securities the same period last year representing a N50 billion bump. FBN Holdings reported that it had about N850 billion invested in treasury bills and government bonds. About N800 billion alone is in treasury bills. FBNH has about N1.2 trillion investment securities with over N1 trillion in treasury bills and government bonds only.
UBA reported an interest income of N238 billion for the 9 month period ended September 2017, of which N82 billion was made from interest earned from treasury bills and bonds. A N19 billion increase from the N63 billion it earned the previous year. A total of N47 billion was earned from treasury bills compared to N20 billion a year earlier. About N35.7 billion was earned from government bonds. The bank had about N530 billion invested in treasury bills and another N470 billion in bonds. In total, N1 trillion was invested in government related securities.
Guaranty Trust Bank (GT Bank) made N75.8 billion from interest in investment securities, of the N248 billion it has made in interest income for the 9 months ended September 2017. This compares to the N36 billion earned the same period in 2016. GT Bank does not disclose income from treasury bills separately. However, investment in government securities made up about 90% of its investment securities portfolio. GT Bank has about N500 billion invested in treasury bills with another N43 billion in government bonds.
Access Bank reported an interest income of N240 billion for the 9 months ended September 2017, of which N57 billion was made from investment securities, compared to the N32.7 billion reported the same period in 2016. Access Bank invested about N75 billion in treasury bills and another N58.5 billion in government bonds.
Zenith earned N84 billion as income from treasury bills, and N32 billion as interest on government bonds, of the N361 billion it has earned as interest income so far this year. This contrasts to the N37.3 billion and N38.4 billion earned in Treasury Bills and FGN Bonds respectively in the same period in 2016. The bank also earned another N34 billion in treasury bills trading income making it the top earner from government securities. Zenith Bank also had about N719 billion invested in treasury bills in the period under review, compared to N424 billion same period in 2016.