How Baobab Microfinance Bank supports customers with loan restructuring in pandemic year

Following the impact of Covid-19 pandemic on businesses and in line with the directive of the Central Bank of Nigeria (CBN), Baobab Microfinance Bank Limited restructured 90 percent of its customers’ loans.

The bank, which has operated for 12 years has since inception disbursed N100 billion to its customers. The number of customers supported with loans stood at 237,550 since inception, with the number of outstanding loans to customers put at 22,921.

“While we tried to be very careful with covid-19, we also ensured that we were able to do our business in a very safe manner. Part of what we did during this period was to ensure consistently that we were able to support our customers,” Kazeem Olanrewaju, managing director/CEO said recently during a media chat in Lagos.

“We have less than two per cent of the restructured loan in our book, which means that some of the opportunity we gave to the customers to come back is working. We discharged the customers of all the penalties, part of the loan interest and in some cases, we tried to enhance the loan even when those people have not fully paid,” Olanrewaju said.

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He noted that the bank gave customers three options, to either pay following the repayment schedule they have before, and there will not be any charge.

Secondly, customers can also pay the backlog, or have the opportunity to extend their loans depending on the cash flows. Each of these customers took advantage of the restructured loans to continue in business, he said.

Olanrewaju said the bank has disbursed an average of N3 billion monthly from August 2020 to date. “We actually planned to be doing N3.5 billion so we are N500 million short of the plans that we have. We still have the whole year left for us and we believe we will be able to catch up with this number,” he said.

The bank recorded total assets of N21.3 billion as at December 31, 2020, its share capital unimpaired by loss (equity) stood at N4.7 billion, while its share capital was put at N2.4 billion.

On the Portfolio At Risk (PAR), he said the bank is doing 2.73 percent, which is lower than the 5 percent regulatory threshold.

The gross loan portfolio of the bank stood at N15.4 billion with a saving deposit of N9.4 billion as at May 2021. The bank currently has 24 branches located in Lagos, Ogun, Oyo, Kaduna, Nasarawa and Federal Capital Territory (FCT).

“We have seen new branches open. This year we have opened a new branch in Ibadan, Abeokuta. We are working on the one in Lagos, which has to be opened before the end of July. We are also working on another branch in Jos, which also would be opened before the end of July,” he said.

Responding to the issue recapitalisation, Olanrewaju said, ““Without meeting the capital requirement, the bank cannot have a licence and without a license, the bank cannot operate.

“I am happy to announce that as it stands, at the end of last month, our capital was already N4.7 billion. What the Central Bank requires us to do is to have N5 billion capital base by April 2022. From our projections, and from what we are already seeing, by October, this year, we should have the N5 billion that is required even ahead of time.”