FSDH Weekly Market Review for April 25th
You can review the FSDH weekly market review here .
They had an interesting article on whether the banks were making too much profit. My personal opinion is that they do. They are declaring some very ridiculous profits these days and it is hard to justify how they are making these huge sums.
They reviewed a speech by the CBN president, Dr Soludo who categorically stated that the banks aren’t making too much money as their returns on equity is still relatively small.
Dr Soludo blamed the high lending rates on:
- high cost of funds
- risks involved in borrowing
- uncertainty about future inflationary trends
- poor infrastructure which increases the banks’ operating costs
- high overhead costs
The speech by Dr Soludo can be downloaded here .
FSDH’s opinion is that though banks arent making too much profit, they arent financing the real sector of the economy adequately due to the poor state of infrastructure in the economy which makes borrowing cost higher than it should be. They also stated that improvement in the infrastructure is the key to accelerating growth in the real sector of the economy.
Market Analysis | 
donne4real | April 28, 2008