Following banks’ implementation of reduced charges as recently directed the Central Bank of Nigeria (CBN), analysts and operators have underscored the need for banks to increase lending to growing companies in the small and medium enterprises (SMEs) space to avoid erosion of revenue and boost their bottom-line.
The analysts argued that commercial banks must depart from the usual norm of chasing a few big-ticket firms and focus more on providing loans and advances to small businesses while keeping their non-performing loans (NPLs) under check to guard against eroding income.
They also urged banks to diversify into financial advisory services like fund management, and real estate management to enhance profitability.
“However, the CBN is determined to drive economic activities by encouraging the banks to increase lending to the real sector and reduce their investments in FGN securities. The banks are expected to generate their major income from their interest income line. This can only grow if they increase their loans and advances to customers.
“Other income lines for the banks are limited, as the sector is a highly regulated one, hence the need to grow their loan book to drive income and boost revenue.”