Stanbic IBTC Holdings Plc and Access Bank Plc recorded the largest increase in loans and advances to customers in the first half of this year.
BusinessDay analyzed the half-year financial results of seven listed banks: Access, Zenith, United Bank for Africa, Guaranty Trust Holding Company (GTCO), FCMB Group, Stanbic IBTC Holdings Plc and FBN Holdings Plc.
Stanbic IBTC increased its loans and advances to customers to N1.06 trillion at the end of the first half of 2022, up 39% from N0.76 trillion in the same period last year.
Access Bank’s loan portfolio grew by 29% to N4.62 trillion in the first half of 2022 from N3.58 trillion in the same period last year.
Zenith Bank increased its loans and advances to customers by 22% to 3.66 trillion naira from 3 trillion naira.
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FCMB loans and advances to customers also increased by 22% to N1.12 trillion in the first half of 2022 from N0.92 trillion in the same period of 2021.
UBA’s loans and advances to its clients stood at N2.75 trillion at the end of 2022, up 4.5% from N2.63 trillion in the same period of 2021 .
GTCO, the holding company of Guaranty Trust Bank Limited, said its loans and advances to customers increased by 12% to N1.83 trillion in the first half of 2022 from N1.63 trillion in the same period of 2021.
FBN Holdings, the holding company of First Bank of Nigeria Limited, saw its loans and advances to customers increase from N2.53 trillion to N1.83 trillion.
“Loans to customers depend on the strategy of each bank. In times of economic stability, banks will tend to increase their loan assets because businesses are doing well. They are earning interest and loans should not deteriorate as the economy is doing well,” said Ngozi Odum, financial services analyst at CardinalStone Securities.
According to her, banks are supposed to lend to customers, but what matters is the amount they lend, which is why the Central Bank of Nigeria (CBN) has a regulatory loan to deposit ratio (LDR).
From the beginning of 2020 to the end of last year, the LDR ratio fluctuated between 58.35% and 62.68% amid the economic fallout from the COVID-19 pandemic, which plunged the country into a recession. The LDR rose to 65.95% in July 2022, from 59.12% at the end of 2021.
The CBN had, in a circular dated July 3, 2019, mandated depository banks to maintain a minimum LDR of 60% by September 30, 2019, with the aim of improving lending to the real sector of the national economy. . The minimum LDR was raised in October 2019 to 65%.
He said that to “encourage SMEs, retail, mortgages and consumer lending”, the sectors would be given a 150% weighting in the LDR calculation.
The impact of higher lending is positive for the economy as it facilitates growth, according to Odum. “However, it must be taken into account that the debtors have the capacity to repay these loans, otherwise the impact on the banks is negative.”
“Last year, most banks reduced their loan issuance because everything was in dire straits, but since the second half of 2021, economic activities kicked into full gear, which led banks to increase loans. loans to customers,” said research analyst Ope Oluwa. at Cordros Securities, said.