The country’s largest banks may be set to embark on a round of acquisitions as they seek to diversify their sources of income away from treasury bills. According to consulting firm McKinsey, the proportion of Nigerian bank earnings derived from fixed-income securities increased from 14%in 2009 to 30% in 2019. But a collapse in Treasury bill yields, coupled with inflation at its highest for three years, means there’s no prospect of positive real returns on the paper in the foreseeable future. Opportunities remain for banks to develop scale across segments, by targeting small and medium-size enterprises or geographies such as the north of the country, which remains underserved, McKinsey says. But economists argue that outside of the market for loans to salaried employees, banks are hampered by a lack of data on potential customers to allow them to assess credit risk. There are few credit bureaus that can provide data on people working in the informal economy.
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