Nigeria’s Banking Sector Loans To Hit ₦24.4 trillion by 2021 – Afrinvest

Leading independent investment banking firm, Afrinvest Limited, has forecasted that Nigeria’s banking sector loans will hit ₦24.4 trillion by the end of 2021, following the CBN’s Loan-To-Deposit Ratio (LDR) policy, which mandates banks to loan out 65 percent of customers deposits.

The Group Managing Director, Ike Chioke made the statement at the launch of its 15th Nigerian Banking Sector Report, entitled “The Insecurity Challenges of Poverty” in Lagos. He said the COVID19 pandemic will cause the country to record its worst economic contraction since 1983.

READ ALSO: How Stanbic IBTC Leveraged Technology for the 2020 Edition of Together4ALimb

He, however, added that a modest recovery is anticipated in 2021 as a result of the reduction in crude oil output which is helping to improve the price of the commodity which Nigeria depends heavily on for foreign exchange earnings and the sustained improvement in the non-oil sector.

Choike noted that the country’s economy has been below optimal performance in the past four years, cutting the budget forecast for 2020 from N5.4 trillion to N3.8 trillion.

“When looking at the components of the budget alongside oil production, prices and exchange rates, we are worried with the revenue target and with our debt ratios accelerating due to record spending, we might not be able to hit our target and this would mean the debt profile of our country will go higher which does not augur well”, he explained.

In his review of the Nigerian banking sector, he noted that the total assets grew strongly as a result of an increase in deposits and is anticipated to reach N54.3 trillion at the end of this year and rise to N57.8 trillion at the end of 2021

He, however, sounded his concern over the earning profile of the industry, stating that Nigerian banks are finding it difficult to meet the CBN’s policies on LDR.

LEAVE A REPLY

Please enter your comment!
Please enter your name here