United Bank of Africa, Zenith Bank and Access Bank led the pack of banks that dominated transactions in the Treasury Bills and Federal Government bonds in half-year ended June 30, 2019.
With the low-yield environment, four leading banks generated N281 billion from investing in T-Bills and Federal Government bonds. The increase of 19.5% from N235.4 billion generated by the same four banks in the H1 2018 audited result and accounts released to the Nigerian Stock Exchange.
While UBA reported 11.1% increase on interest income investing in securities from N78.9 billion in H1 2018 to N87.7 billion in H1 2019, Access Bank Plc reported N61.14 billion interest income investing in securities, 118% increase over N28.1 billion reported in H1 2018.
Zenith Bank plc reported 11.3% increase on interest income generated from T-Bills and FGN Bonds from N77.29 billion to N85.9billion within the same period.
However, Guaranty Trust Bank Plc was the only bank with a decline on interest income generated from investing in securities to N46.5 billion, 9% below N51.1 billion reported in the preceding half-year results.
GTBank noted that earning asset yield declined by 101 basis points from 13.07% in H1 2018 to 12.06% in H1 2019 as a result of portfolio yield on T-Bills, which average 15.6% in H1 2019 as against 17.4% in H1 2018 and reduction in yield on local currency risk assets from 16.8% in H1 2018 to 16.1% in H1 2019.
Yields on fixed income securities continue to moderate in line with the apex bank’s desire for a low-interest-rate environment, with the average 91 days T-Bills dropping to 10.26% in the second quarter of 2019 from 12.39% in the first quarter of 2018.
Also, average 1-year T-bills yield dropped to 14.33% in the second quarter of 2019 from 15.76% in the second quarter of 2019.
Meanwhile, the Monetary Policy Committee of the CBN asked the managements of the banks to limit access to government securities and increase lending to the real sector.
The Governor, CBN, Mr. Godwin Emefiele, who is also the chairman of the committee, had said, “In view of the abundant opportunities that available to banks for unfettered access to government securities, which tend to crowd out private sector lending, the MPC called on management to provide a mechanism for limiting deposit money banks’ access to government securities so as to redirect banks’ lending focus to the private sector noting that this would spur the badly needed growth in the economy.”