None of Nigeria’s six biggest banks met the 65 percent minimum Loan-to Deposits Ratio (LDR) requirements of the Central Bank of Nigeria (CBN) as of December 2020.
That did not stop gross banking industry credit from increasing by N5.55 trillion between End-May 2019 and End-February 2021, according to CBN data seen by MoneyCentral.
Access Bank was the closest to meeting the threshold with LDR of 55.10 percent, followed by FBN Holdings at 54.5 percent, Zenith Bank with LDR of 52 percent, Stanbic IBTC at 47 percent, Guaranty Trust Bank 46 percent and UBA 43 percent.
Despite the biggest banks not meeting the 65 percent LDR threshold, the measure is helping to spur the beginnings of an increase in lending.
Over N4.56 trillion additional credit was created in the last one year, N300 billion in the last one month and N6.95 trillion of additional deposits, according to data from the Central Bank of Nigeria (CBN).
“The Other Financial Institutions have also expanded credit appreciably, thereby providing credit support to women, workers, and informal sector operators, those that are discriminated against by the traditional banks. Data on the industry’s credit disbursement shows that 83.04% of banking creditors were able to access credit at below 15% lending rates,” Adenikinju, Adeola Festus member of the CBN’s monetary policy committee (MPC) said.
The 6 major banks had combined loan impairment charges of N209.535 billion as at December 2020, comprising of Access Bank (N62.89 billion), FBN Holdings (N50.60 billion), Zenith (N39.53 billion), UBA (N27.01 billion), Guaranty Trust Bank (N19.57 billion) and Stanbic IBTC (N9.93 billion).
Banking industry Non-performing loan ratio deteriorated marginally from 6.10 per cent in December 2020 to 6.30 per cent in February 2021 in line with growth in the loan portfolio.
Total credit to the economy grew by N642.19 billion from N20.48 trillion at End-December 2020 to N21.12 trillion as at End-February 2021, with significant increases recorded in major sectors driving domestic GDP growth-manufacturing, agriculture, construction and general commerce.
“Maintaining the positive trajectory of credit growth, especially in critical sectors (manufacturing, retail & SMEs) will be instrumental to accelerating output growth in the short to medium term,” the CBN said.