Connect with us

Business

Govts, Oil Firms, Manufacturers Borrow N8.24tn From Banks

Published

on

bank loans
  • Govts, Oil Firms, Manufacturers Borrow N8.24tn From Banks

The oil and gas sector, governments and manufacturers account for the large chunk of loans from Nigerian banks as of the end of March this year.

The total loans given to the oil and gas, manufacturing sectors and governments by banks in the country stood at N8.24tn at the end of March.

Latest data obtained from the National Bureau of Statistics revealed that loans given to the oil and gas sector stood at N4.686tn, while the governments got N1.368tn.

The manufacturing sector got a loan of N2.241tn, while general commerce received N1.035tn.

Loans to the general, finance and insurance, and power and energy sectors stood at N1.019tn, N954.68bn and N683.93bn, respectively while agriculture, forestry and fishing sector and construction sector got N648.89bn and N642.87bn, respectively.

Information and communication sector and the real estate sector secured N607.95bn and N599.39bn loans respectively.

Loans to transportation and storage sector stood at N213.94bn, while capital market got N227.28bn.

The professional, scientific and technical services industry secured a loan of N170.92bn, while public utilities and the education sector got N78.91bn and N58.4bn, respectively.

Loans to the human health and social work sector stood at N23.09bn; water supply, sewerage, waste management and remediation activities sector got N22.68bn; and arts, entertainment and recreation sector received N11.34bn.

The mining and quarrying sector and extraterritorial organisations and bodies got N8.97bn and N0.03bn, respectively.

The banking sector’s non-performing loans stood at N1.676tn as of the end of March 2019, according to the NBS.

The gross loans recorded in the banking sector stood at N15.480tn, while the loans after specific provisions stood at N13.739tn in the period under review.

The ratio of the NPLs to total loans was 10.83 per cent, while the ratio of NPLs to total loans after specific provisions was 12.2 per cent

The total amount of NPLs at the end of 2018 was N1.792tn, while the gross loans and loans after specific provisions were N15.353tn and N13.562tn, respectively.

Banks’ NPLs fell by six per cent from 15 per cent in June 2017 to nine per cent in May 2019, the Central Bank of Nigeria said.

The apex bank said capital adequacy ratio for the banking industry improved from 11 per cent in June 2017 to over 16 per cent in May 2019 and liquidity level also increased by over 20 per cent within the same period.

The CBN, Godwin Emefiele said, “In addition, the ratio of non-performing loans in the banking system has reduced from 15 per cent in June 2017 to nine per cent in May 2019, due to concerted efforts by the CBN and the Deposit Money Banks, although more work is being done to moderate NPL levels to the maximum prescribed level of five per cent.

“Our financial institutions are well-positioned to perform their intermediation role, which will ultimately help in supporting the growth of our economy.”

He said the drop in commodity prices affected a good number of banks given their exposure to the oil and gas sector, and this resulted in an increase in banks’ NPLs.

According to the CBN, as a result of risk management measures embarked upon by it, capital adequacy and liquidity ratios of commercial banks are now above the prudential levels.

The Managing Director/Chief Executive Officer, Asset Management Corporation of Nigeria, Mr Ahmed Kuru, recently expressed concerns over the resurgence of huge toxic loans in the banking sector.

He called on the authorities to revisit the Failed Bank Act so that operatives in the banking sector would be made to account for their actions.

He also urged banks to immediately strengthen their risk management frameworks to stem the negative growth.

Kuru explained that given the huge resources that were available to financial institutions and the pivotal role they played in the development of the economy, it became mandatory for financial institutions to take the issues of risk management seriously to prevent what happened during the global financial crisis.

He suggested that in line with the fight against corruption, there was a need to address impaired and arranged credits so that operators would be held responsible for booking credits contrary to their credit policy that went bad under their supervision.

He noted that one of the reasons for the failure of the banking system during the global financial crisis of 2008/2009, which eventually led to the creation of AMCON, was the prevalence of weak risk management framework by financial institutions.

The Chairman, Independent Corrupt Practices and Other Related Offences Commission, Prof. Bolaji Owasanoye, said recently that the commission would collaborate with AMCON to recover debts.

He said the huge debts had become existential challenge for the country since the few people who were the debtors were still walking free and waxing strong in the society.

Considering the positive impact the funds would have in the economy if recovered, Owasanoye said the time had come for the ICPC and other relevant sister agencies to partner AMCON and support the debt recovery drive.

He said, “We have to be practical in our approach. Something needs to be done and very fast too given the approaching AMCON sunset because this is public funds we are talking about here. We need AMCON and ICPC to work closer and develop a strategy that would work.

“We need the public to know the opportunity cost of the huge debt to the Nigerian economy, we need to share information as sister agencies locally and internationally and treat this matter as a last lap race by setting up a joint taskforce to deal with this sobering issue.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Company News

Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

Published

on

Guinness - Investors King

Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

Continue Reading

Business

Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

Published

on

Private employers

As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

Continue Reading

Business

Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

Published

on

Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending