A Financial Analyst, Mr Ayokunle Olubunmi, says several factors including policy changes, economic conditions and technological advancements will influence the Banking Sector performance in 2024.

Olubunmi, who is the Head, Financial Institutions Ratings at Agusto and Co, disclosed this at a forum organised by the Finance Correspondents Association of Nigeria (FICAN) on Thursday in Lagos.

The forum had the theme, 2024 Economic Review/Outlook: “Impacts of Reforms on Banks’’.

According to him, predicting the exact outcome is difficult due to the dynamic interplay of these elements.

He noted that those that would proactively address the challenges and capitalize on the opportunities presented by these factors would likely emerge stronger and more successful.

This, he said, requires flexibility, innovation, and a clear understanding of the shifting landscape.

 He outlined some of the themes that could impact the Nigerian banking sector in 2024 to be a more accommodating Central Bank, hawkish monetary policy, reform of the foreign exchange market, lower FX gains and muted International Trade, among others.

He also said that expanding Nigerian banks abroad could diversify risk but face new challenges.

He also noted that strengthening banks’ capital base could improve stability and lending capacity.

Olubunmi said that consolidation could create larger, more efficient banks but potentially reduce competition adding that issuing new licenses could increase competition and innovation, but potentially fragment the market.

He also said that shake-up in the merchant banking segment could create opportunities for some banks and challenges for others.

He said that reform of the cash reserve requirement when modified could affect banks’ liquidity and profitability.

He also said that enforcing loan-to-deposit ratio compliance could drive credit expansion but raise concerns about credit quality.

On basel III transition, the analyst said that implementing stricter capital adequacy rules could improve financial stability but raise compliance costs.

On macroeconomic downturn, he noted that economic slowdown could increase loan defaults and impact banks’ earnings adding that banks might face competition from non-bank players in digital payments.