Traditional Banks - Nigeria

Nigeria

In Nigeria, the Traditional Banks market market is expected to witness a significant growth in Net Interest Income, reaching a projected value of ₦US$56.97bn in 2024.
Among the different segments within the market, Traditional Retail Banking is expected to dominate with a projected market volume of ₦US$42.57bn in 2024.
Looking ahead, Net Interest Income is anticipated to exhibit a steady annual growth rate (CAGR 2024-2029) of -13.06%.
This growth trajectory would result in a market volume of ₦US$28.29bn by 2029.
When compared globally, China is expected to generate the highest Net Interest Income, with a staggering value of ₦US$3,869.0bn in 2024.
Despite the rise of digital banks, traditional banks in Nigeria are still trusted by the majority of the population for their long-standing reputation and extensive branch network.

Key regions: Germany, United Kingdom, France, Japan, China

Definition:

The Traditional Retail and Commercial Banks 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. 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.
The traditional banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. These banks have a long history of serving customers and have established relationships and a deep understanding of the financial needs of their communities. They offer a wide range of services and are able to provide personalized advice and support to their customers.
In this market, banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. However, they also face challenges, such as increased competition and changing customer preferences, which are driving the need for continuous improvement and adaptation.
Overall, the traditional retail and commercial banking market provides a wide range of financial services to both individuals and businesses through established, trusted channels and continues to play a vital role in the financial landscape.

Structure:

The market consists of two segments:
- The Traditional Retail Banks market refers to financial services provided to individual consumers (e.g., personal loans, savings and checking accounts, credit cards, mortgages).
- The Traditional Commercial Banks market refers to financial services provided to businesses, including small and large enterprises (loans, lines of credit, other financial products specifically designed for businesses).

The market data comprises Net Interest Income, the value of Deposits, the value of Loans, 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 and commercial banking market, creating opportunities for new entrants and forcing existing players to adapt.

Key players in this market are companies such as Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

The Traditional Banks market in Nigeria has been experiencing significant developments and trends in recent years.

Customer preferences: Customers in Nigeria are increasingly seeking traditional banking services due to a growing trust in established financial institutions and a preference for in-person interactions when managing their finances. The sense of security and reliability offered by traditional banks plays a crucial role in attracting customers in the Nigerian market.

Trends in the market: One notable trend in the Traditional Banks market in Nigeria is the expansion of branch networks to reach more underserved areas. Traditional banks are investing in physical infrastructure to establish a stronger presence across the country, catering to the needs of a diverse customer base. Additionally, there is a growing trend towards digital transformation among traditional banks in Nigeria, with a focus on enhancing online banking services and introducing innovative digital solutions to improve customer experience.

Local special circumstances: Nigeria's regulatory environment and infrastructure challenges have influenced the development of the Traditional Banks market in the country. Strict regulatory requirements ensure stability in the banking sector, while infrastructural limitations have pushed traditional banks to find creative ways to reach customers in remote areas. Moreover, the cultural preference for face-to-face interactions in financial matters has shaped the service offerings of traditional banks in Nigeria.

Underlying macroeconomic factors: The macroeconomic landscape in Nigeria, including factors such as GDP growth, inflation rates, and government policies, plays a significant role in shaping the Traditional Banks market. Economic stability and government initiatives to promote financial inclusion have created opportunities for traditional banks to expand their customer base and introduce tailored products and services. Additionally, the competitive environment and interest rate dynamics impact the profitability and growth strategies of traditional banks operating in Nigeria.

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.