ETI Leads as Zenith Bank, 8 Others Granted N16.68trn Loans to Customers In 2021

Kayode Tokede 

A total loans & advances of N16.68 trillion was granted by Ecobank Transnational Incorporated (ETI), Zenith Bank Plc and eight other banks to their customers in 2021, representing 15.6 per cent increase over N14.42 trillion reported in the full year 2020, analysis of the banks 2021 financial year results have revealed.

Analysis of six teir-2 banks’ financial statements for the year ended December 31 2021 and four Teir-1 banks showed that loans to customer s went up by N2.3 trillion.

The Tier-1 banks are; ETI Plc, Zenith Bank Plc, Guaranty Trust Holding Company Plc (GTCO) and United Bank for Africa Plc.

The investigated tier-2 banks are; Stanbic IBTC Holdings Plc, Wema Bank Plc, First City Monument Bank Plc, Fidelity Bank Plc, Unity Bank Plc and Sterling Bank Plc.

According to the Central Bank of Nigeria (CBN) money and credit statistics had reported that credit to private sector hits N35.73trillion in 2021 to emerge as all-time high banks lending to private sector.

The apex bank had reported N26.65trillion credit to private sector in 2019 and with the latest figure of N35.73trillion, it means credit to private sector has added N9.03 trillion in the last three years.

However, a breakdown of the banks 2021 results showed that ETI granted the largest loans to customers as the pan-African Bank released a total of N4.1 trillion as loan facilities to its customers, up nearly 10 per cent from N3.7 trillion in 2020.

Zenith Bank in its audited financial statement reported 21 per cent increase in loans & advances to customers to N3.36 trillion in 2021 from N2.78 trillion reported in 2020. 

Also, UBA reported 2.5 per cent increase in loans & advances to customers to N2.68 trillion in 2021 from N2.55trillion in 2020 while GTCO reported 8.4 per cent increase in loans & advances to customers to N1.8 trillion from N1.662 trillion reported in 2020.

Fidelity Bank Plc lead tie-2 banks in loans & advances to customers at N1.65 trillion from N1.33 trillion in 2020, while FCMB Group recorded significantly increase in its loans & advances at N1.06 trillion in 2021 from N822.77million in 2020. 

Further analysis showed Stanbic IBTC’s Holdings grew its loans by 47.3 per cent to N921.04 billion in 2021 up from N625.13 billion reported in 2020 while Sterling Bank loans to customers currently moved to N716.71 billion, up 20.1 per cent from N596.82 billion the bank reported in 2020.

In addition, Wema bank posted N418.17 billion Loan advance to customers under the period in review, indicating a 16.1 per cent rise from N360.07 billion the full year 2020.

Meanwhile, with the advent of the COVID-19 pandemic and severe completion by Fintech companies, Nigerian banks have also deployed mobile App strategies and other traditional forms in driving loans to customers.

Challengers such as; Carbon, Fairmoney, Branch, among others have made significant advancements into the retail banking space as they offer incentives to youth to abandon the more traditional access to loans.

Analyst believe Fintechs are challenging the scope of lending to customers, stressing that current financial services space does not poses a threat to Nigerian banks loans & advances to customers.

“The Fintechs operation is currently been felt in loans to retail customers.  Easy accessibility by Fintechs has given them leverage and they have a market niche over the banks. They targeted mostly the youths and as you likely know, accessing loans from banks demand documentations which the youths do not have that patient.

“However, the youths form the larger market share with easy access to N50,000 loan unlike banks that target a single customer with loan of about N2billion. The Fintech space was not viable for banks because in the past, how many customers were banks granting N10,000 loan? However, the story has changed but I don’t really see much competition between the bank and Fintech companies disbursing loans to customers, ” Markets Analyst, Mr. Rotimi Fakayejo noted.

Fakayejo added: “While most newer banks focus on attracting younger account openers or newer businesses, traditional banks create a value chain of products built into their ecosystem that allows them mobilize a sizeable deposit.

Also, analysts at GTCO in a report titled: “Nigeria Macro-economic outlook for 2022,” stated that: “Following the success recorded in the digital banking space post-pandemic and the massive investments made by banks to contain the pressure from fintechs, Banks will continue to look for innovative ways to grow non-interest revenue as well as consumer and retail loans.”

 “The relatively low yield on fixed income securities (FIS) will mount pressure on banks to intensify credit creations to the private sector which will in turn increase competition for quality loans amongst banks and cause funding cost to inch up slightly.”

The report added that the CBN’s interventions as a percentage of total system liquidity is quite sizeable, and competes with and in some other cases, crowds out loans from banks, most of the intervention funds are for new businesses and to select sectors with a longer tenure.

Meanwhile, the granted loans & advances by the banks was in addition to the over N3 trillion intervention loans disbursed by the Central Bank of Nigeria (CBN) to boost economic recovery and generate employment opportunities in the wake of the Covid-19 pandemic.

Economist & Private Sector Advocate, Dr Muda Yusuf had in a chart with THISDAY stated that the apex bank has no doubt been quite bullish about lending to the real sector and the Small and Mid-size Enterprises (SMEs), stressing that there are various intervention funds- the LDR, and other credit boosting measures by the apex bank.

He explained: “However, there are concerns about the quality of the loan assets, especially those disbursed outside the framework of the deposit money banks. There are reports of high default rates, which have implications for the sustainability of such interventions.”

In addition, Analyst at PAC Holdings, Mr. Wole Adeyeye, said: “The LDR of 65 per cent played a significant role in the economic activities in the country as it encouraged higher loans from banks to the private sector. The lending helped most companies to meet the higher demand in 2021. “For instance, 40 out of the 46 economic activities in the nation’s GDP basket recorded positive growth rate in the third quarter of 2021 (compared with 18 out or 46 economic activities in the third quarter of 2020). This resulted in positive economic growth in the first three quarters of 2021.”