Ease of doing business: ETI, Access Bank, 9 others grant N20.7trn loans to customers
By Alao Matthew and Kayode Tokede
Amid steady growth in the nation’s economy, a total of 11 banks between January and June of 2021 granted N20.7trillion as loans & advances to customers, data generated from listed banks on the Nigerian Exchange Limited (NGX) have shown.
According to Nigerian NewsDirect investigation, Ecobank Transnational Incorporated (ETI) released N3.63trillion loans & advances to customers during the period under review. This is closely followed by Access Bank Plc with N3.58trillion loans to top the chart of banks supporting customers with loans by value during the period under review.
The other affected banks include Zenith Bank (N2.84trillion), United Bank for Africa (N2.63 trillion), FBN Holdings, (N2.54trillion), Guaranty Trust Holdings Company Plc (N1.63trillion), Fidelity Bank Plc (N1.54trillion), FCMB Group (N9166.7billion). Stanbic IBTC (N767.8billion) and Sterling Bank Plc (N646.88billion) loans & advances to customers as at June 30, 2021.
The Central Bank of Nigeria (CBN) recently disclosed that credit to private sector rose by 1.63 per cent to N32.64trillion in June from N32.12trillion reported in May 2021.
The apex bank in its money and credit statistics disclosed that credit to private sector in June rose to highest peak on the heels of banks lending to real sector.
However, further investigation by Nigerian NewsDirect revealed that banks reported modest increase in loans granted to customers in six months of 2021 as most banks exercise caution lending to some sectors yet to recover from the COVID-19 pandemic.
Accordingly, the loans of 11 banks to customers rose marginally by six per cent or N1.22trillion from N19.51trillion reported in full year ended December 31, 2020.
The likes of Guaranty Trust Holdings Company reported N30.64billion or two per cent drop in loans to customers to N1.63trillion as at June 30, 2021 from N1.66 trillion recorded in 2020 while ETI’s loans to customers also dropped by N64.6billion or two per cent to N3.63trililion as at June 30, 2021 from N3.7trillion in 2020.
GTCO in a statement attributed the decline in loans to customers to decrease in FCY loan portfolio as a result of scheduled repayments from obligors in the oil & gas and manufacturing sectors and the decision by management to de-risk the FCY component of its loan book in view of the difficulty experienced by one key obligor in meeting its repayment obligation.
Aside the above two, other banks recorded impressive increase in loans granted to customers in the period.
Specifically, Access Bank grew its loans book by N364.8billion or 11 per cent to N3.58trillion from N3.22trillion in 2020, while United Bank for Africa Plc granted customers N2.63trillion, an increase of N29.58billion or three per cent increase from N2.55billion granted in 2020.
Chief Executive Officer, Access Bank, Mr. Herbert Wigwe in a statement said, “We expanded our loan portfolio, supporting sectors with the highest impact on the economy, with good quality assets as reflected by the growth in our net loans and advances to N4trillion YTD (Dec 2020: N3.6trillion).”
He explained further that, “As we become Africa’s Gateway to the World, we would also seek markets which supports our trade and payments aspirations and the African Free Trade Agreement.
“To further enhance our operating efficiency and ensure strong returns on invested capital, we will bring the best of our group assets, specifically our digital banking capabilities that support individuals and businesses, enhance financial inclusion, and deliver the benefits of a strong network effect across our enlarged Group.
“Throughout the pandemic, we have been able to demonstrate our ability and willingness to support our customers, our communities, and our colleagues. As the outlook improves, and as business returns to a new normal, we will continue to support our communities in order to stimulate growth and create new opportunities. To accomplish our vision to be the World’s Most Respected African Bank, we are working together across the Group on the back of our robust balance sheet, increased retail momentum and efficiency.”
UBA’s Group Chief Financial Officer, Ugo Nwaghodoh had pointed out that even while the operating environment remains largely uncertain and volatile, despite marked improvement from COVID-19 induced macroeconomic stress, the Pan-African bank will continue to build resilience through its geographically diversified business model to support headline earnings growth for FBN Holdings between January and June of this year has granted N2.54 trillion as loans to customers, an increase of N320.7billion or 14 per cent from N2.22trilion in 2020.
Another Tier-1 bank, Zenith Bank granted additional N58.42billion or two per cent increase as loans to customers to N2.84trillion as at June 30, 2021 from N2.78trillion in 2020.
Fidelity Bank recorded N209.33billion or 16 per cent increase in loans to customers from N1.33trillion in 2020 to N1.54trillion as at June 30, 2020 while FCMB Group recorded N93.91billion or 11 per cent in loans & advances to customers from N822.77billion in 2020 to N916.7billion reported as at June 30, 2021.
In addition, Stanbic IBTC Holdings recorded N134.85billion or 21 per cent increase in loans to customers to N767.82billion as at June 30, 2021 from N632.96billion recorded in 2020 as Sterling Bank granted N646.88 billion as loans as at June 30, 2021, an increase of N50.06billion or eight per cent increase from N596.83billion in 2020.
Analysts expressed that the apex bank 65 per cent Loan-to-Deposit (LDR) impacted positively on credit to private sector and drive Gross Domestic Product (GDP).
The CBN governor, Mr. Godwin Emefiele in his personal statement at the end of second Monetary Policy Committee (MPC) of 2021 said the members observed growth in private sector credits over various interventions amid at spurring aggregate demand, stimulating output, and de-risking the productive activities.
Emefiele urged banks not to reliant in granting loans to real sector in a move to fully revived the nation’s economy from last year recession.
The CBN in his communiqué of last week MPC meeting said the committee noted the improvement in lending to the real sector following the introduction of the LDR in 2019.
“Industry gross credit increased by N6.63 trillion from N15.57 trillion at end-May, 2019 to N22.20 trillion at end-July, 2021. The credit growth was largely recorded in manufacturing, oil and gas and agriculture sectors,” he disclosed.
He said the MPC members applauded the continued resilience of the banking system, noting the progressive decline in the non-performing loans ratio, and broad improvement in all banking system parameters, despite the downside risks posed by the pandemic to the smooth running of businesses.
He added that, “While the Committee was cognizant of the credit risks associated with lending in the current economic climate, it urged Nigerian banks to extend more credit to businesses and consumers to facilitate a seamless recovery of output growth, reduce unemployment and stabilize prices.”
