Commercial banks record high loans to customers, reaching N22.9trn in H1 2023
The total loans to customers from seven commercial banks in Nigeria rose to N22.9 trillion in the first half of 2023, the highest in at least six years, analysis of data from their financial statements show.
Their combined customer loans rose by 44.3 per cent from N15.9 trillion in the first half of 2022.
The banks are Guaranty Trust Holding Company (GTCO), Fidelity Bank, Stanbic IBTC Bank, FCMB Group, and United Bank for Africa (UBA), Zenith Bank and FBN Holdings.
A further analysis shows that the banks had an average Loan-to-Deposit Ratio (LDR) of 50.8 per cent. This means that for every N100 deposited, they lent N51.
Their total deposits from customers also increased by 55.1 per cent to N45.3 trillion in H1 from N29.2 trillion the same period of last year.
The Central Bank of Nigeria (CBN) had in 2019 increased banks’ minimum LDR ratio to 65 per cent from 57 per cent. The CBN introduced this requirement in order to encourage banks to lend more money to businesses and individuals, which can help to boost economic growth.
“The justification for the LDR policy is to encourage banks to enhance credit delivery to the real sector of the economy,” CBN said in a report.
LDR is a ratio that measures liquidity by comparing a bank’s total loan credit facilities to its deposit. It is an important measure of a bank’s lending activity.
A high LDR indicates that a bank is lending more of its deposits, which can be a sign of a healthy financial institution. However, a very high LDR can also be a sign of risk, as it means that the bank is more exposed to defaults on loans.
This group had the highest total deposit from customers amounting to N9.04 trillion, up from N6.3 trillion in the same period of 2022.
Its total loans and advances to customers rose to N5.26 trillion from N3.38 trillion. The LDR was 58.2 per cent, up from 53.7 per cent.
GTCO’s total deposit from customers rose to N6.24 trillion from N4.26 trillion.
Its total loans and advances to customers increased to N2.32 trillion from N1.83 trillion.
The LDR was 37.2 per cent, up from 42.9 per cent. The bank’s total deposits from customers increased to N3.18 trillion from N1.91 trillion. Its total loans and advances to customers amounted to N2.65 trillion, up from N2.29 trillion.
The LDR stood at 83.3 per cent, up from 119.9 per cent.
Stanbic IBTC recorded N1.64 trillion in total deposits from customers, up from N1.19 trillion.
Its total loans and advances to customers amounted to N1.66 trillion, up from N1.06 trillion. Its LDR stood at 101.2 per cent, up from 89.1 per cent.
FCMB recorded N2.38 trillion as its total deposit from customers, up from N1.64 trillion. Its loans and advances to customers amounted to N1.54 trillion, up from N1.12 trillion.
Its LDR stood at 64.7 per cent, down from 68.29 per cent.
Zenith recorded N11.1 trillion as its total deposit from customers, up from N7.15 trillion. Its loans and advances rose to N5.1 trillion from N3.5 trillion.
Its LDR stood at 43.4 per cent, up from 48.9 per cent recorded in the same period of 2022.
UBA reported a total deposit from customers of N11.1 trillion, up from N6.73 trillion. Its loans and advances amounted to N4.5 trillion from N2.8 trillion. Its LDR stood at 40.4 per cent, down from 40.8 per cent.
