Stanbic IBTC Bank records 69% Loan to Deposit Ratio
In an effort to continually increase the growth of its credit exposures to the real sector of the economy, Stanbic IBTC Bank has recorded a 69 per cent Loan to Deposit Ratio (LDR).
The Central Bank of Nigeria (CBN) in its circular, BSD/DIR/GEN/LAB/12/070, to banks dated January 07, 2020 on the regulatory measures to improve lending to the real sector of the Nigerian economy, directed banks to maintain a minimum 65 per cent LDR with a further requirement that an average daily 65per cent LDR compliance is maintained by banks.
However, since the issuance of the regulatory directive and in line with its key strategic objective of driving economic growth in Nigeria, the lender’s management has focused on ensuring compliance with the regulatory directive of improving lending to the real sector of the Nigerian economy.
This is even as the bank has explained that the real sector has been responsible for the growth in its risk asset portfolio over the last two years.
For instance, the bank’s loan book increased by 18 per cent from FY 2019 position of N556.4billion to N655.3billion as of 31 December 2020.
The Bank also recorded an increased loan growth by 30 per cent from the 31 December 2020 position to a gross risk asset position of N854.9billion recorded as of 30 September 2021.
It is important to note that the risk asset growth of 18 per cent and 30 per cent recorded by the Bank in FY 2020 and as of Q3:2021 remain significantly higher than the industry average growth of 18 per cent and 8 per cent in FY 2020 and as at Q3:2021, respectively.
Consequent upon the significant growth recorded in the Bank’s risk asset growth in 2020 and YTD 2021, the Bank has remained compliant with the CBN’s daily minimum LDR requirement of 65 per cent with FY 2020 daily LDR average of 65.84 per cent and 2021 YTD daily average of 69.86 per cent.
It is important to note that the Bank suffered no CRR debits by the CBN for non-compliance with the regulatory LDR directive over the period.
For the good record, it is also noted that the growth in the Bank’s Cash Reserve Requirement (CRR) position from N369.0billion as of 31 December 2020 to N462.6bn as at 30 September 2021 has been largely on account of the monetary policy actions introduced by the CBN to rein in inflationary and exchange rate pressures in the economy.
In line with its price stability and monetary policy mandates, the CBN is saddled with the responsibility of managing surplus liquidity in the system and at various times over the period, the CBN has introduced special CRR debits to sterilize surplus market liquidity.
These special CRR debits which are over and above the minimum regulatory cash reserving requirement of 27.5 per cent of customer deposit growth have indeed been responsible for the growth in Stanbic IBTC Bank’s total and effective CRR positions which stood at N462.6billion and 60.09 per cent respectively as at 30 September 2021.
Notwithstanding the financial constraints arising from the sterilized liquidity from the CBN, Stanbic IBTC Bank remains very liquid and adequately capitalized with liquidity ratio and capital adequacy ratio standing at 96.2 per cent and 15.7 per cent respectively as at 30 September 2021 and above the regulatory minimum of 30 per cent for liquidity ratio and 8 per cent for capital adequacy ratio.
