Professor Ndubuisi Ekekwe, a renowned entrepreneur and investor, has commended Guaranty Trust Holding Company (GTCO) for achieving a record-breaking profit of N905.6 billion in the first half of the year, marking the highest level ever reached by any Nigerian publicly listed company. Quoting a report by Premium Times, Ekekwe highlighted that GTCO’s net interest income, a key metric that reflects the difference between earnings on loans or financial assets and the cost of borrowings or maintaining depositor funds, surged by 177% to reach N491.5 billion.
“Typically, as the Central Bank of Nigeria hikes interest rates, banks experience ‘alpha moments’ because they can charge higher interest rates,” Ekekwe remarked. “It is not the bank’s fault that interest rates are high and US dollar forex movements are favoring them.”
However, Ekekwe cautioned against viewing the banking sector’s success in isolation, describing it as an “illusion” amid broader economic challenges. He questioned how banks could achieve such high profits while the manufacturing sector struggles, attributing this phenomenon to the directives of the Central Bank of Nigeria (CBN).
“This trend will likely continue as the US dollar’s position shifts, causing inflationary pressures in a country heavily reliant on imports, where farming communities are also grappling with insecurity and banditry,” Ekekwe explained. “To combat inflation, interest rates are raised, creating a vicious cycle.”
Ekekwe concluded by reflecting on the paradoxical nature of Nigeria’s economic development, where banking profits soar even as the broader economy faces significant hurdles.
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