Tier-2 banks recorded average Loan to Deposit Ratio (LDR) of 68.3 percent in the first half of 2019 with Fidelity Bank Plc leading with a record 95.7 percent LDR.
This was followed by FCMB 80.5 percent LDR, Sterling Bank plc 78.4 percent, Stanbic IBTC 69.2 percent, and Wema Bank Plc 65.1 percent.
Union Bank Plc and Unity Bank Plc recorded 59.2 percent and 29.7 percent respectively, which is below the 65 percent minimum ratio pegged by the Central Bank of Nigeria (CBN).
The CBN had raised the LDR to 65 percent and set December 2019 as deadline for compliance by deposit money banks.
The banking sector report by Afrinvest West Africa, revealed that tier-1 banks recorded 58.0 percent average LDR in the first half of the year with Access Bank leading with 68.1 percent LDR.
This is followed by Zenith Bank 62.7 percent, Ecobank 58.0 percent, GTB 57.9 percent, FBNHolding Company 52.6 percent, and United Bank for Africa (UBA) 48.5 percent.
Non-Performing Loans (NPL) for the tier-2 banks averaged 5.5 percent in the first half of 2019 from average of 6.2 percent in full year 2018.
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NPLs of tier-1 banks stood at an average of 8.9 percent in the first half of 2019 from 10.1 percent in the full year 2018.
Industry gross earnings projected to recover strongly in 2019 to N4.9 trillion from N4.1 trillion in 2018. The industry turnover stood at N2.4 trillion in the first half of the year.
The banking sector total assets is expected to hit N44.2 trillion by the end of 2019, which is 7.8 percent compared with N41.0 trillion in 2018.
At the end of the first half of 2019, the sector recorded N43.7 trillion in total asset, according the banking sector report by Afrinvest West Africa which was launched on Monday.
“Total asset remain strong,” said Ike Chioke, group managing director, while presenting the report with the theme, ‘Beyond the Precipice…Pulling Back from the Brink’, in Lagos.
The industry’s total deposits is expected to reach N29.1 trillion by the end of 2019, growing at 25.4 percent as against N23.2 trillion in 2018. Total deposits stood at N25.6 trillion in the first half of 2019.
The report showed that the total loan of the banking sector stood at N15.7 trillion in the first half of 2019 and is expected to hit N16.1 trillion by the end of the year.
Charles Soludo, former governor of the Central Bank of Nigeria (CBN) and current member of the economic advisory council to the President expects the subsequent Afrinvest banking sector report to show the kind of banking sector to be seen in the next five to 10 years.
“I think it might be one way of pushing us in the direction of the further reforms and further changes especially disruptive changes. I like the concept of disruptive changes. You can’t repeat the same thing over and over and expect a different outcome,” Soludo said.
“I urge this particular public issue which I think as authoritative as it is become a flagship publication of the banking sector and I look forward to get a full copy and read it. I strongly recommend it to everyone”.
He noted there was massive transformation compared with the numbers before banking sector consolidation.
However, he said, “Banking total asset without a say about their size and so on, is just too minuscule”.
“In subsequent once let us look at where we are in terms of the depth of the banking relative to, even in comparison to Africa. I checked banking by asset size, percentage of GDP, and I was shocked as to how low we are even by African standard. Countries like Mauritius, Kenya, Senegal, Ghana and several others were much high. That might have some implication about saving the banking and financial system and the kind of economy we want to empower,” Soludo said.
