Five Nigerian Banks Support Customers with N6.6trn Loans in Six Months

Recession bites

Five banks have boosted the businesses of their customers with N6.561trillion in the first six months of the year through loans and advances.

The amount of loans and advances is 21 per cent higher than the N5.435trillion given out by the same banks in the same period of the previous year. The five banks are FBN Holdings Plc, Union Bank of Nigeria Plc, Ecobank Transnational Incorporated, Sterling Bank Plc and FCMB Group Plc.

Given the headwinds in the economy that have increased the risk of debt repayment, banks were expected to reduce their exposure to their customers. However, THISDAY checks showed that instead of a reduction in level of lending, the five banks that have released their results for the half year ended June 30, 2016, increased their support in terms of loans and advances to customers.

Ecobank Transnational Incorporated that has operations across the African continental led with N2.856 trillion, up from N2.321trillion in 2015.

FBN Holdings Plc trailed with N2.111trillion, compared with N1.817trillion in 2015. FCMB Group Plc gave out loans and advances of N657 billion, up from N593billion the previous year, while Union Bank of Nigeria Plc boosted the businesses of its customers with N475billion in 2016, an improvement on the N366billion in 2015.

Sterling Bank Plc recorded loans and advances of N462billion, up from N338billion in 2015.
Market analysts said while the economic situation remains challenging, banks are strengthening their risk assessment strategies to ensure mitigation against those challenges.

For instance, FBN Holdings last week said it had continued to revamp its credit and risk management processes towards generating high quality assets and have begun to see improvements in this process operationally.

According to the Managing Director /CEO of First Bank, Dr. Adesola Adeduntan said, “Despite the 40 per cent devaluation impact on our risk assets, we have made progress with building stronger risk management architecture and strengthening the overall control environment. The economic slowdown has continued to constrain lending activities; however, as we overhaul our risk management processes, lending will be measured, very structured and controlled. We are focusing on growing transactions/activities of our existing customers as we keep leveraging our robust technology to provide digital banking and other innovative solutions to best serve our customers.”

Also speaking on the asset quality, Managing Director of Sterling Bank Plc, Mr. Yemi Adeola said: “The bank prioritised improvement in asset quality which was reflected by a 70 basis point decline in the non-performing loans and a 100 basis point reduction in cost of risk. Cost of funds also declined by 120 basis points to 4.7%. This was in spite of the foreign exchange liberalisation policy, the attendant liquidity squeeze and the rising inflation rate which peaked at 16.5 per cent in June 2016.”

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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