Revealed: How 6 banks boosted lending by N10.4trn in 2017

No fewer than six commercial banks accounted for total lending of N10.4 trillion to their customers as at December 31, 2017, representing growth of 0.6 per cent from N10.37 trillion loans granted to customers in 2016.

The Deposit Money Banks (DMBs) include Access Bank, Guaranty Trust Bank Plc (GTBank), Ecobank Transnational International (ETI) and Zenith Bank Plc. Others are United Bank for Africa Plc (UBA) and Stanbic IBTC Holdings Plc.

Of the above six banks, our correspondent reports that loans and advances of GTBank and Zenith Bank dropped in 2017 while that of Access Bank gained 10.3 per cent.

The breakdown revealed that GTBank’s loans and advances to customers dropped by 8.9 per cent to N1.4 trillion from N1.59 trillion reported in 2016 while Zenith Bank reported 8.3 per cent dropped in loans and advances to customers to N2.1 trillion from N2.29 trillion in 2016.

GTBank in a statement explained that “Loan book contracted by 8.9 per cent due to cautious effort to de-risk the balance sheet, repayment of USD term loans and unwinding of USD trade obligations.”

Access Bank reported 10.3 per cent increase in loans and advances to N1.99 trillion from N1.8 trillion.

Similarly, UBA’s loans and advances gained 9.7 per cent from N1.5 trillion in 2016 to N1.65 trillion in2017 while Stanbic IBTC’s loans and advances to customers grew by 5.4 per cent to N372.1billion from N352.97 billion reported in prior year.

In addition, ETI’s loans and advances inched up by 1.4 per cent to N2.86 trillion ($9.4 billion) as against N2.8 trillion reported in 2016.

The pan-African bank in a statement said: “Customer loans (net) of $9.4 billion, increased one per cent, but in constant currency, decreased, four percent, reflecting our decision to slow down credit origination due to factors including – a still difficultoperating environment and loans that are challenged.”

The Banking sector in Nigeria fragilities was high in 2017 over worsening Non-Performing Loans (NPL) precipitated by a large drop in the prices of crude oil that started in the second quarter of 2014 and production shock that was caused by hostility in the oil producing region.

Unstable global oil prices led Nigeria’s economic into recession, forcing foreign exchange liquidity crisis which resulted in about 70 per cent devaluation in the value of the Naira with the parallel market exchange rate at a record high in February 2017.

The Central Bank of Nigeria (CBN) had disclosed that Banking sector credit to the private sector increased year-on-year (y-o-y) to N22.29 trillion in 2017 from N21.98 trillion banks provided to the private sector in 2016.

A report by Renaissance Capital disclosed that, “On the oil and gas front, weak oil prices directly affect cash flows from loans extended to either the upstream or service firms (where day rates have been cut by anything between 40-60 per cent).

“Further, while the banks had mostly restructured to $35-45/bl break even price levels, we think sub $30/bl oil threatens the profitability of operating a number of fields, making it near impossible to further restructure these assets if oil prices stay at these levels.

“Further, global economic conditions suggest a highly uncertain outlook for oil prices and the extent to which they could remain low, raising valid questions on the ongoing performance status of these loans.”

In February, the National Bureau of Statistics (NBS) said credit facilities allocated to the private sector by banks in the fourth quarter of 2017 decreased to N15.74 trillion from the N15.83 trillion recorded in the third quarter,

The report by NBS stated that the Oil and Gas and Manufacturing sectors got the highest credit allocations of N3.58 trillion and N2.17 trillion respectively. The credit allocation was divided into three categories: Agriculture, Industry, and Services. For agriculture, the report shows that 3.36 per cent of the total credit granted, worth N528.2 billion, was allocated.

Industry, mining and quarrying accounted for 0.16 per cent of the total credit worth N25.3 billion. Manufacturing, being the second highest benefactor of the bank credits in the fourth quarter accounted for 13.79 per cent of the total credits. Oil and gas; power and energy accounted for 22.72 per cent and 2.88 per cent respectively. The credit allocated to power and energy was worth N453.9billion.

Under the services category, construction was allocated 4.17 per cent of the total credit worth over N657 billion and general commerce (Trade) accounted for 6.50 per cent, worth N1.02 trillion.