Loans and advances granted by Nigeria’s fourteen (14) deposit money banks (DMBs) rose by N2.87 trillion to hit N13.08 trillion in 2014 from the N10.20 trillion recorded in 2013. This represents 22 per cent increase and was achieved on a collective deposit base of N19.33 trillion by the same banks during the period under review.
The banks’ deposit base for the previous year (2013) was N17.49 trillion which increased by 1.84 trillion or 10 per cent. The increase in bank loans and advances, according to experts, follow the banks’ aggressive involvement in retail banking as the lenders have shown keener interest playing their role as financial intermediaries in the economy. A look at the banks’ performance in their 2014 annual reports and accounts show that Eco Bank tops the list with N2.28 trillion, a 40.8 percent increase with the N663 billion added to the N1.62 trillion the bank extended to its customers in the previous year.
Eco Bank’s figures were followed with those of First Bank of Nigeria whose total loans and advances for 2014 was N2.2 trillion. In 2013, First Bank advanced loans worth N1.8 trillion which increased by N400 billion to hit N2.2 trillion in 2014, as Zenith added N480 billion or 38.4 per cent to the N1.25 trillion it advanced in 2013 to hit N1.73 trillion in 2014 financial year. GT Bank, Access Bank and UBA, followed with a total of N3.45 trillion; with a breakdown of N1.28 trillion, N1.1 trillion and 1.07 trillion respectively. The six banks account for N9.66 trillion out of the total N13.08 trillion loans and advances granted by the 14 banks or 74 per cent. The 14 banks’ gross earnings for 2014 was N3.11 trillion, with Eco Bank and First Bank toping the list.
The two banks recorded gross earnings totaling N2.28 and N2.2 trillion each from the N1.62 trillion and N1.8 trillion achieved in 2013, a percentage difference of 40.8 and 22.2 per cent respectively. The Central Bank of Nigeria (CBN) has been hard on banks and their customers whose loans are classified as non-performing and the apex bank has threatened to commence publication of the names of the debtors with non-performing loans (NPL) .
Majority of the NPLswere extended to the power sector operators whose ambition of achieving industry growth following the privatization of the sector in November 2013, has turned to be a mirage. Capital market operators and financial consultants who spoke to The UNION last week confirmed that the stable-cleaning role played by the Asset Management Company of Nigeria (AMCON) which bought over the banks’ toxic assets after the bank reform exercise, assisted the banks in managing their facilities more professionally.
Sam Willie Ndata of Compass Investments & Securities Ltd said the banks are more aggressive in retail banking and that the competition for professionalism has benefited the industry as shown in their 2014 reports. His views are corroborated by those of Ariyo Olushekun, former president, Chartered Institute of Brokers who commended the improved corporate governance culture among banks in the postreform period.