Banking - Nigeria

Nigeria

In 2024, it is projected that the Net Interest Income in the Banking market of Nigeria will reach a staggering ₦US$68.09bn.
The market is currently dominated by Traditional Banks, with a projected market volume of ₦US$66.68bn in the same year.
Looking ahead, the Net Interest Income is expected to exhibit a steady annual growth rate (CAGR 2024-2028) of 2.76%, resulting in a market volume of ₦US$75.91bn by 2028.
However, it is worth noting that in global comparison, in China is anticipated to generate the highest Net Interest Income, with a staggering ₦US$5,659.0bn in 2024.
Nigeria's banking sector is experiencing a surge in digital banking services, as mobile banking becomes increasingly popular among consumers.

Key regions: United States, China, Japan, Brazil, United Kingdom

Definition:

The Banking market refers to the financial services sector providing financial products and services to individuals and businesses. Retail banking focuses on offering financial services to individual consumers, such as personal loans, savings and checking accounts, credit cards, and mortgages. Commercial banking, on the other hand, provides financial services to small and large businesses, including loans, lines of credit, and other financial products designed specifically for businesses.

Structure:

The market consists of two segments:
- The Traditional Banking market refers to the financial services sector that provides a range of financial products and services to individuals and businesses through store-based branches and other traditional channels.
- The Digital Banking market refers to the emerging market for digital-only banks that offer financial services through online and mobile platforms.

The market data comprises Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Additional information:

The Banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. Banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Additionally, changes in regulations and the growing trend toward digitalization are shaping the Retail & Commercial banking market, creating opportunities for new entrants, and forcing existing players to adapt.
Key players in this market are companies such as the Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

The Banking market in Nigeria has been experiencing significant growth and development in recent years.

Customer preferences: Customers in Nigeria are increasingly turning towards digital banking solutions, such as mobile banking apps and online platforms, due to the convenience and accessibility they offer. This shift in preferences is driving banks in the country to invest more in their digital infrastructure and services to meet the growing demand for digital banking.

Trends in the market: One of the notable trends in the Nigerian banking market is the increasing focus on financial inclusion. Banks are expanding their reach to unbanked populations in rural areas through agency banking and mobile money services. This trend is not only driven by regulatory requirements but also presents a significant business opportunity for banks to tap into new customer segments.

Local special circumstances: The regulatory environment in Nigeria plays a crucial role in shaping the banking market. Stricter regulations around capital requirements and risk management have pushed banks to strengthen their operations and improve their overall stability. Additionally, the prevalence of fintech companies in Nigeria is creating a competitive landscape for traditional banks, prompting them to innovate and adapt to changing market dynamics.

Underlying macroeconomic factors: The macroeconomic landscape in Nigeria, including factors such as GDP growth, inflation rates, and foreign exchange stability, directly impacts the banking sector. Economic fluctuations and currency volatility can affect banks' profitability and asset quality. As a result, banks in Nigeria closely monitor macroeconomic indicators and adjust their strategies to mitigate risks associated with external factors.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Modeling approach / Market size:

Market sizes are determined by a combined Top-Down and Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use data provided by the IMF, World Bank and the annual reports of the top 1000 Banks by asset size. Next we use relevant key market indicators and data from country-specific associations such as GDP, deposit interest rates, lending interest rates or bank account penetration rates. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. For example, the S-curve function and exponential trend smoothing are well suited to forecast financial services for digital as well as traditional products and services.

Additional Notes:

The market is updated twice per year in case market dynamics change.