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Wednesday, June 7, 2023

Zenith Bank’s Well Diversified Portfolio Underpins Asset Quality

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Zenith Bank Nigeria Plc’s diversified loan portfolio across sectors has supported asset quality as the relaxation of the lockdown measures that spur business activities helped valued customers meet obligations.

Its non-performing loans (NPLs) stood at 4.50 percent as at June 2021, which is lower than the 5 percent regulatory threshold.

A nonperforming loan (NPL) is a loan in which the borrower is in default and hasn’t made any scheduled payments of principal or interest for some time.

Zenith Bank

In banking, commercial loans are considered non performing if the borrower is 90 days past due.

The International Monetary Fund considers loans that are less than 90 days past due as nonperforming if there’s high uncertainty surrounding future payments.

The central bank was jittery that the coronavirus pandemic could stoke exposure to oil and gas, a dark memory of the 2009 financial crisis and 2016 slump in crude oil price.

However, the big lenders were unscathed by the virus induced crisis, but impairment charges on financial assets soared. And spiraling impairment charges are transitory because the government stimulus and relaxation of lockdown combined with the roll out of vaccines led to accelerated business activities.

Zenith Bank’s impairment charge on financial assets reduced by 17.23 percent to N19.80 billion in June 2021 from N23.92 billion the previous year.

The lend said it provided critical support to its loan customers to help them navigate through the challenges posed by the pandemic.

“Continuous adoption of a complete and integrated approach to risk management that is driven from the Board level to the operational activities of the bank,” said Zenith Bank.

A critical look at the allocation of loans per sector by Zenith Bank shows it allocated N633.88 billion to Manufacturing, which represents 18.84 percent of the entire gross loans of N2.99 trillion.

Upstream Oil and Gas was allocated N550.16 billion; government was loaned N475.41 billion; General Commerce, N396.68 billion; Agriculture, N164.45 billion; Downstream Oil and Gas, N146.51 billion; Transportation, N131.56 billion; Consumer Credit,  N140.53 billion; Real Estate and Construction, and N119.60 billion.

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