Diamond Bank sees ‘minimal’ loan growth as economy falters: Nigeria’s Diamond Bank said it plans to build up cash reserves to ride out a slowdown in the economy that will depress lending after a sharp drop in global oil prices and the weakening naira.
Abdulrahman Yinusa, the chief financial officer of Nigeria’s sixth biggest lender by assets, told Reuters Africa Investment Summit on Wednesday that overall loan growth would slow this year compared with last year. The bank will release its results soon when it will say how much its loan book grew in 2014. “Loan growth is going to be very minimal, we don’t see anything more than 10 percent,” Yinusa said in Lagos.
Africa’s biggest oil producer expects to lower its forecast for 2015 economic growth NGGDPQ=ECI again, after cutting its forecast to 5.54 percent in January, as oil prices fell and the naira weakened further last month. Yinusa said the bank also planned to increase its holding of government bonds, where yields are at around 15 percent.
Why it’s increasing bond holdings
Government bonds accounted for 35-40 percent of assets, which is expected to grow to 45 percent this year, he said. “Our philosophy for 2015, is to put cash first. Liquidity is the first order of priority and … then conservative lending.” Yinusa also expected half of its deposits to come from consumers over the three-year period, up from 40 percent now.