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Ten Nigerian Banks have increased their loan disbursement to customers by N1.84 trillion in the first three quarters of 2019. This is obtained in the third quarter financials of various banks released so far.  

According to the report, the gross loans by the ten Banks rose to N13.55 trillion in September 2019 compared to N11.70 trillion in December 2018. This means the banks increased their loans’ disbursement by 15.8% (N1.84 trillion).  

Breakdown of Loans’ Disbursed 

Specifically, the Ten Nigerian banks that have released their financials so far include Access Bank, First Bank, Zenith, UBA, GT Bank, Stanbic IBTC, Wema Bank, Unity, Sterling and Fidelity Bank.  

  • A look into the financials showed that Access Bank recorded the highest additional loan disbursement of N801.7 billion within the period under review (December 2018 to September 2019). The Bank’s loans and advances rose from N2.13 trillion in December 2018 to 2.93 trillion in September 2019. This represents a whopping 37% increase in loans.  
  • UBA ranks second with an additional loan disbursement of N254 billion, representing a 14% rise between December 2018 and September 2019.  
  • Fidelity Bank ranks third with an additional loan disbursement of N224.2 billion within the period.  
  • Zenith Bank’s additional loan disbursement stood at N219.9 billion, thereby increasing its total loans and advances from N1.82 trillion in December 2018 to N2.04 trillion in September 2019.  
  • GT Bank also increased its loans by N115.9 billion, representing a 9% increase in 9 months.  
  • Stanbic IBTC loan disbursement also rose by N101 billion, Unity Banks (N45.1 billion), First Bank (N37.9 billion), Wema (N34.7 billion) and Sterling (N14.07 billion).

 READ MORE: Disrupting Nigerian banks

CBN’s 65% Loan to Deposit Ratio  

While the Banks increased loans and advances within the nine months period, a further check into the financials showed that a cumulative sum of N2.52 trillion was received as a deposit. This means comparing it against the total N1.84 trillion loans disbursed for the same period, the loan to deposit ratio (LDR) across the Ten Banks stood at 73.1%.  

  • A quick look at the CBN credit to the private sector shows that it rose by N2.51 trillion within the last nine months.  
  • Recall, that the Central Bank of Nigeria in a recent circular disclosed that the LDR target for all Deposit Money Banks (DMBs) has been reviewed upward from the initial 60% to 65%.  Also, all DMBs are to now attain a minimum LDR of 65% by December 31, 2019. 
  • Following the earlier September deadline, the CBN debited a combined sum of N499.1 billion from the vault of 12 banks to hold the cash at zero percent interest rates. This was regarded as a penalty for the Banks. Meanwhile, as reported on Nairametrics, the CBN has started to refund banks as they meet the loans to deposit ratio.  
  • According to the financials of the ten banks released so far, only two Banks have currently met the 65% loan to deposit ratio as of September 2019.
  • The analysis showed that only Fidelity and Sterling Bank currently have LDR above 70%%, while UBA, Zenith, Stanbic, GT Bank, Access Bank, Wema Bank, Unity and First Bank still post LDR below 65%. 

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

 Some Downsides of the LDR’s Policy  

Despite the rise in loans disbursed by the Banks to the economy, recent concerns suggest the Central Bank is pushing the bank hard. Recently, the CBN issued another directive to cancel any requests from individuals or local companies for the purchase of Treasury Bills at Primary or OMO auctions. 

  • Analysts believe the directive by the CBN may not be unrelated to the recent efforts to promote lending to the real sector by commercial banks. 
  • Following the new directive, there are indications that this may result in banks resorting to ingenious ways to meet these requirements, and this may have many unintended negative effects on the economy.  
  • Essentially, analysts believe banks will continue to explore other ways of meeting CBN’s requirements without significantly directing loans to the real sector.
  • Also, forcing banks to lend under the current macro-economic situation may again build up in non-performing loans and this could pose a risk to financial stability in the economy.  



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