Seven banks’ customer loans hit N23trn in H1

The total loans to customers from seven commercial banks in Nigeria rose to N22.9 trillion in the first half of 2023, the highest in at least six years, a BusinessDay analysis of data from their financial statements show.

Their combined customer loans rose by 44.3 percent from N15.9 trillion in the first half of 2022.

The banks are Guaranty Trust Holding Company (GTCO), Fidelity Bank, Stanbic IBTC Bank, FCMB Group, United Bank for Africa (UBA), Zenith Bank and FBN Holdings.

A further analysis shows that the banks had an average Loan-to-Deposit Ratio (LDR) of 50.8 percent. This means that for every N100 deposited, they lent N51.

Their total deposits from customers also increased by 55.1 percent to N45.3 trillion in H1 from N29.2 trillion the same period of last year.

The Central Bank of Nigeria (CBN) had in 2019 increased banks’ minimum LDR ratio to 65 percent from 57 percent. The CBN introduced this requirement in order to encourage banks to lend more money to businesses and individuals, which can help to boost economic growth.

“The justification for the LDR policy is to encourage banks to enhance credit delivery to the real sector of the economy,” CBN said in a report.

LDR is a ratio that measures liquidity by comparing a bank’s total loan credit facilities to its deposit. It is an important measure of a bank’s lending activity.

A high LDR indicates that a bank is lending more of its deposits, which can be a sign of a healthy financial institution. However, a very high LDR can also be a sign of risk, as it means that the bank is more exposed to defaults on loans.

FBN Holdings

This group had the highest total deposit from customers amounting to N9.04 trillion, up from N6.3 trillion in the same period of 2022.

Its total loans and advances to customers rose to N5.26 trillion from N3.38 trillion. The LDR was 58.2 percent, up from 53.7 percent.

GTCO

GTCO’s total deposit from customers rose to N6.24 trillion from N4.26 trillion.

Its total loans and advances to customers increased to N2.32 trillion from N1.83 trillion.

The LDR was 37.2 percent, up from 42.9 percent.

Fidelity

The bank’s total deposits from customers increased to N3.18 trillion from N1.91 trillion. Its total loans and advances to customers amounted to N2.65 trillion, up from N2.29 trillion.

The LDR stood at 83.3 percent, up from 119.9 percent.

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Stanbic IBTC Holdings

Stanbic IBTC recorded N1.64 trillion in total deposits from customers, up from N1.19 trillion.

Its total loans and advances to customers amounted to N1.66 trillion, up from N1.06 trillion. Its LDR stood at 101.2 percent, up from 89.1 percent

FCMB

FCMB recorded N2.38 trillion as its total deposit from customers, up from N1.64 trillion. Its loans and advances to customers amounted to N1.54 trillion, up from N1.12 trillion.

Its LDR stood at 64.7 percent, down from 68.29 percent.

Zenith

Zenith recorded N11.1 trillion as its total deposit from customers, up from N7.15 trillion. Its loans and advances rose to N5.1 trillion from N3.5 trillion.

Its LDR stood at 43.4 percent, up from 48.9 percent recorded in the same period of 2022.

UBA

UBA reported a total deposit from customers of N11.1 trillion, up from N6.73 trillion. Its loans and advances amounted to N4.5 trillion from N2.8 trillion. Its LDR stood at 40.4 per cent, down from 40.8 percent.