Ahead of CBN’s policy implementation, Fidelity Bank’s LDR hits 80% 

As the deadline set by the Central Bank of Nigeria (CBN) for the commencement of the new directive on Loan to Deposit Ratio (LDR) is fast approaching, Fidelity Bank Plc has disclosed that its LDR is presently at 80%.

Speaking at an entrepreneurship incubation seminar in Abuja, the lender’s Regional Bank Head, Abuja, Vanessa Mordi, stated that Fidelity Bank has since been committed to its mandate of growing its customer base with special focus on the Micro Small and Medium Enterprises (MSMEs) sub-sector.

“We believe that banking is about taking from the haves to the have-nots. Most of the loans we’ve given are to MSMEs. We identified this niche area long before other banks did. Others are coming into the market now, maybe with the CBN directive.” 

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Nairametrics had reported that the Central Bank, in a circular, directed all Deposit Money Banks (DMBs) to lend out a minimum of 60% of their deposits. This directive, the CBN said would take effect from September 30, 2019.

Why this matters: While Fidelity Bank’s present LDR is laudable, it should be noted that with an average LDR around 40%, it would not be erroneous to assert that Nigerian banks are some of the most reluctant lenders in major emerging markets. According to the data compiled by Bloomberg, the average ratio across Africa is 78%. South Africa tops the chart with 90% while Kenya Kenya is at 76%.

What you should know: There have been reactions from stakeholders in the finance and banking sector following the disclosure of the new policy. One of the many stakeholders who aired their views on the subject matter is Zenith Bank’s CEO, Ebenezer Onyeagwu.

Speaking during his introductory visit to the Nigerian Stock Exchange (NSE), Onyeagwu said the 60% Loan to Deposit Ratio policy wouldn’t impact negatively on the banking sector, rather, it would favour banks who are effective credit risk managers.

He also stated that the increment in loan-level would help build Nigeria’s economy as Small and Medium Enterprises (SMEs) and the retail sector would have more access to credit facilities that would enable their growth and expansion.

Meanwhile, PriceWaterhouseCoopers had asserted that SMEs contribute 48% to the national GDP, accounts for 96% of businesses and 84% of employment in Nigeria.

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