Banks grow loan books by 57% to N37.17trn 

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Leading Deposit Money Banks quoted in the Nigerian Exchange Limited (NGX) in NIgeria have grown their loan portfolio by 57 percent for the year ended December 31, 2023.

The banks, which include  Zenith Bank Plc, FBN Holdings Plc, Access Bank Plc, Guaranty Trust Holding  Company (GTCo) Plc, United Bank for Africa (UBA) Plc, Stanbic IBTC Holdings Plc, Fidelity Bank Plc, Sterling Bank Plc, Wema Bank Plc, and FCMB Group Plc, grew their customer loan to N37.17 trillion in 2023 from N23.68 trillion in the corresponding period in 2022.

Analysis of the banks loan position for the period showed that tier-1 banks recorded the highest increase both in percentage and actual value terms.

Tier-2 bank, Stanbic IBTC Bank, led with a 68.6 percent increase in its loan book to N2.03 trillion in 2023 from N1.21 trillion in 2022, followed by a tier-1 bank – FBN Holdings Plc, with 68 percent increase to N6.36 trillion from N3.79 trillion.

Another tier-1 bank, United Bank for Africa (UBA) Plc, placed third, growing its loan book by 66.7 percent to N5.23 trillion from N3.14 trillion in 2022; Zenith Bank Plc placed fourth with a 63.3 percent increase to N6.56 trillion from N4.01 trillion, while Access Corporation (AccessCorp) Plc grew its loan book to N8.04 trillion from N5.10 trillion, representing a 57.58 percent increase.

Others are Wema Bank, which recorded a 53.9 percent increase to N802 billion from N521 billion; FCMB Group Plc (+53.4% to N1.84bn); Fidelity Bank Plc (+46.1% to N3.09trn); GTCo Plc (+31.5% to N2.48trn) and Sterling Bank Plc with 3.7 percent increase to N738 billion.

Agusto & Co in a 2023 Banking Industry Report, noted that the banks took advantage of the rising liquidity occasioned by the eradication of the ‘arbitrary’ cash reserve ratio (CRR) debits to grow their loan books.

The firm said: “Following the inauguration of President Tinubu, the new administration has implemented several reforms aimed at reversing prevailing macroeconomic imbalances. The reforms including the removal of the petrol subsidy, exchange rate harmonisation, tax reforms and restoration of a methodological framework for calculating the cash reserve requirements (CRR) provide growth opportunities for the Industry.

“For instance, we believe many banks will take advantage of rising liquidity following the eradication of arbitrary CRR debits to grow the loan book, especially since the working capital needs of businesses continue to rise given the weakening domestic currency and other inflationary pressures.

“We expect that the new loan disbursements will largely flow to traditional sectors including manufacturing, oil and gas and general commerce amongst others and resilient players given the volatile operating terrain. Nascent sectors such as renewable energy, health and gender-based businesses will also continue to gain.”

Analysts at Cardinalstone, an investment banking firm, said: “This credit growth was largely propelled by the impact of currency devaluation on banks’ foreign currency loans. To our minds, 2024 is likely to be a year of correction for credit growth due to the sustained macroeconomic issues in the country.

“Banks are likely to retain restrictive credit lending policies, targeting sectors and obligors that are relatively more creditworthy. Hence, we expect full year 2024 loan growth to revert to a 4-year mean of 19.9%.”

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