As lenders vie for Nigeria’s retail market amid a directive to lend more, Standard Chartered Nigeria, local outlet of the London bank, is mulling expansion in the retail banking space in a bid to boost growth and diversify risk.
The corporate-focused lender in an interview reported by Bloomberg said retail banking would offer an opportunity for exponential growth.
“It’s just a logical expansion of our portfolio” so the company can be diversified should there be a downturn in other parts of the business,” said Lamin Manjang, the chief executive officer for Standard Chartered’s Nigerian unit.
The bank said the business banking segment within its Retail portfolio is currently small relative to opportunities it sees in that market.
Standard Chartered Bank has a target to raise revenue contributions of Retail banking to its Nigerian business by slightly more than double to 15 percent in the next two years.
The lender eyes a five-fold increase in its current 100,000 Retail clients by leveraging digital technology which would enable customers to open an account in less than five minutes.
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Also, Standard Chartered Nigeria, which plans to grow its overall loan book in 2019 by five percent to 10 percent, says it has doubled the size of the facility it offers in personal loans to N20 million ($55,300).
The move by the bank follows directives by Nigeria’s Central Bank for lenders to give a minimum of 60 percent of total deposits received or risk sterilisation of a percentage of the shortfall.
Deadline for the first round of evaluation is at the end of September after which review of lenders’ performance would be quarterly, the apex bank has said.
In response, lenders in the country have noticeably increased their footprint in the Retail banking space and have relied on digital technology to create products alluring to loan seekers.
Nigerians wake to emails and text messages from banks offering loan products to finance small businesses, pay schools fees, and similar needs; the lenders under pressure scuttle for Retail customers.
“I hope the penalty for noncompliance can be waived or looked at,” Manjang said. “People are put under pressure to meet a certain target within a short period of time.”
According to Manjang, the unintended consequence of the policy aimed at enhancing credit flow to boost real sector activities could cause banks to initially price loan aggressively.
After a while, however, lenders would adopt “measures to symmetrically grow their loan books in a responsible way,” he said.
