Global banks to make history with $5.8trn net interest income in 2024

• US, Chinese banks to generate 30% of NII

• African banks absent on the log

• Nigerian lenders left far behind

Ben Eguzozie 

Banks worldwide are set to make history this year as their aggregate net interest income is projected to reach $5.8 trillion, the highest figure in the market’s history, according to new data made available to Business a.m. by Stocklytics. 

This interest income growth is in spite of growing much slower than in previous years, but which is now said to be on track to hit a record in the market’s history.

Also, the world’s banks’ annual net interest income (NII) surged by 48 percent in five years. The NII is the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors. In 2023, the world’s biggest banks, including JP Morgan Chase and Bank of America, saw strong net interest income growth driven by higher interest rates.

According to a Statista survey, in 2023 banks worldwide reported a combined net interest income of $5.4 trillion, or 14.2 percent more than the year before. However, 2024 is expected to set a new record.

Although the annual growth rate will more than halve to 6.7 percent, the global net interest income in the banking industry will still hit an all-time high of $5.8 trillion, the Stocklytics data showed. This figure is more impressive when compared to those reported only five years ago. Statistics show the net interest income in the banking sector has grown by 48 percent since 2019, when it amounted to $ 3.9 trillion.

When analysed by segments, traditional banks bring most of the total net interest income in the banking industry. Last year, they reported an NII of $4.8 trillion, and Statista expects this figure to grow by four percent year-over-year to $5 trillion in 2024. 

Although far behind traditional banking institutions, digital banks will see much bigger growth, with their net interest income jumping by 26 percent year-over-year (YoY) to roughly $800 million this year.

US, Chinese banks to post 30% of total NII in 2024

In global comparison, the United States, the world’s largest banking market, is expected to generate the highest net interest income. According to Statista, the US banks will hit over $877 million NII in 2024, or almost 10 percent more than last year.

The Chinese banking sector, which generated the highest net interest income last year, dropped to second place in 2024. Statistics show the net interest income of Chinese banks is expected to hit $861.5 million this year, or six percent (6%) more than in 2023. Together, the two banking markets will generate nearly 30 percent of the total net interest income in 2024.

Far below, Indian banks follow with a five-percent (5%) year-over-year increase and $338 million in net interest income this year.

Africa absent on the log

Africa is absent on the log of the Stocklytics’ global financial markets survey for 2024, as the continent’s banks were not listed. As of 2021, the total assets of the banking sector in sub-Saharan Africa (SSA) corresponded to 76.9 percent of the region’s GDP.

According to a report citing the latest ranking of World Bank stats, African banks have less than one percent (1%) of total world bank capital compared to other reputed regions such as North America, Europe, and Asia. However, The Banker’s latest ranking indicates that African banks outperform their profits, and they contribute two percent (2%) of global profits, and deliver a 19.49 percent return on capital.

According to an African Development Bank’s (AfDB’s) economic outlook, contrary to what is commonly stated, Africa’s banking industry is as competitive as those in Latin America & Caribbean and not very different from the competitive environment existing in high-income OECD countries. 

However, the banking sector in Africa is much shallower and less penetrated than those in other major regions of the world, the AfDB said. 

In particular, “in terms of technology and innovation, the region continues to improve and in some cases, has leap-frogged ahead of other regions, particularly in mobile banking. The continent lags behind OECD and Latin America & Caribbean on other dimensions of banking innovation such as electronic payments,” the AfDB report said. 

Nigeria left far behind 

For Nigeria, total bank assets were over N87 trillion as of H1 2023. The country had 133.5 million active accounts as of 2021. However, its three biggest banks: Zenith Bank, Access Bank, and First Bank of Nigeria, come in distant 12th, 13th and 14th in Africa’s top 100 banks in 2023.