Agusto & Co. Limited has said it expects more banks to adopt the Holdco structure as they show interest in investing in other sectors.

The Pan-African credit rating agency and the business information provider said this in its 2023 Nigerian banking industry report titled, ‘The Nigerian banking industry – A resilient industry navigating a volatile operating terrain’, released on Thursday.

It said, “As the competitive landscape is changing, the holding company structure is gaining more prominence with banks seeking to diversify into new businesses such as pension and asset management, while responding to the disruption by fintech companies.

We expect more banks to go the HoldCo route as the competitive landscape changes. Similarly, environmental and social considerations are also expected to be more prominent in the near term.”

According to the report, the Nigerian banking industry had continued to be resilient despite the raging macroeconomic and regulatory headwinds that had constrained performance in the last three years.

Innovation and malleability of the banks as reflected in the transition to the financial holding company structure and upscale of banking licence by some players had upheld the industry, it said.

Agusto & Co. noted that the industry’s loan book rose by 27 per cent in FY 2022, spurred by increased activities at the differentiated cash reserve requirement window, higher deposit base and naira devaluation.

“We believe many banks will take advantage of rising liquidity following the eradication of arbitrary CRR debits to grow the loan book, especially since the working capital needs of businesses continue to rise given the weakening domestic currency and other inflationary pressures,” the report said.

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