In the period between December 2020 and December 2021, the conjoined loan portfolio of 10 Deposit Money Banks in Nigeria grew by N2.9tn, data from their financial statements show.
The banks are Stanbic IBTC, Fidelity Bank Plc, Sterling Bank, Wema Bank, First City Monument Bank, Access Bank Plc, Guaranty Trust Bank Plc, United Bank for Africa Zenith Bank Plc, and Union Bank Plc.
The loans and advances to their customers grew to N17.63tn as of December 31, 2021, from N14.64tn at the end of 2020.
This indicates an increase of about 20 per cent growth in their loan books. According to their financial statements, all the reviewed banks expanded their loan portfolios during the period.
Loans and advances to customers, which account for the major proportion of the banks’ total assets, rose in 10 of the lenders. Nigerian banks’ loan books have grown in recent years on the back of the Central Bank of Nigeria’s push for more lending.
The CBN had in July 2019 mandated all commercial banks to maintain a minimum loan-to-deposit ratio of 60 per cent by September 30, 2019, in a bid to improve lending to the real sector. The minimum LDR was reviewed to 65 per cent in October 2019.
Access Bank extended its loan book to N4.16tn at the end of December 2021, from N3.22tn in December 2020, while that of Zenith Bank grew to N3.35tn from N2.78tn. UBA increased its loans and advances to customers from N2.55tn to N2.68tn during the review.
GTB grew its loan book to N1.80tn at the end of December 2021 from N1.66tn in December 2020, while that of Fidelity Bank rose to N1.65tn from N1.32tn.
FCMB’s loan portfolio grew by N238bn from N822.7bn to N1.06tn during the review. Stanbic IBTC’s financial results show that its loans to customers rose to N937.14bn from N625.14bn in December 2020, showing an increase of N312bn. Union Bank recorded an increase of N175.5bn to N868.8bn from N692.80bn.
While Sterling Bank increased its loans and advances to customers to N1.06tn as of 2021 from N596.83bn in December 2020, Wema bank grew its loan book to N418.8bn in March from N360.08bn during the period under review.
A global credit rating agency, Moody’s Investors Service, released in 2021 stating that Nigerian banks’ loan quality would weaken as coronavirus support measures were implemented by the government and the central bank last year, including last year the loan repayment holiday, are unwound.
According to the report, the banks face higher asset quality risks as coronavirus support measures are withdrawn amid large single-name and sectoral concentrations, and banks hold a large volume of foreign currency loans.
However, in 2022, the agency changed its outlook for the Nigerian banking sector from negative to stable.
“We have changed our outlook for the Nigerian banking sector to stable from negative to reflect our expectations of stronger economic activity over the coming 18 months, which will boost banks’ business volumes and earnings, and help to protect their loan performance from further deterioration,” Assistant Vice President-Analyst at Moody’s, Peter Mushangwe, said.
