Banks deposits are mainly short-term in nature and lending funds to customers for long-term can lead to asset mismatch, Managing Director/CEO, Fidelity Bank Plc, Nnamdi Okonkwo, has said.
He stated this at the 2016 Annual Conference of the Finance Correspondents Association of Nigeria (FICAN) in Lagos at the weekend.
Nnamdi Okonkwo asserted that, although commercial banks want the economy to grow by lending to farmers and other productive sectors of the economy, they also have to keep an eye on the stability of their institutions.
Okonkwo who spoke on the theme: ‘Nigeria Beyond Oil: Financing Options for Non-Oil Exports’, said: “A whole lot of people do not realize that banks’ business is to buy and sell money.”
“So, I come to the market to purchase my raw material, which is cash, and my finished goods are also cash. Every other thing banks do are added services. Banks get a lot of bashing for not lending long-term.”
“If as a banker, I know that secret place where I can find long-term funds, we will be the number one bank in Nigeria today, because I can lend long-term”.
Okonkwo further disclosed that most depositors, who have huge amounts to save, invest in short term basis and collect huge interest on such deposits.
The Fidelity Bank MD recently advanced support for youth development, which according to him, remains the key to national growth.