Fifty
customers owe commercial banks the sum of N5.23tn, representing 33.4 per cent
of the total private sector credit exposure of N15.68tn, the Central Bank of
Nigeria’s Financial System Stability report has stated.
The
FSS report, posted on the CBN website on Saturday, also showed that the
nation’s banks gave N1.537tn loans to oil companies and some state governments
in the first six months of the year.
“The
total exposure to the top 50 obligors
stood at N5.23tn (33.4 per cent) of total
industry credit exposure of N15.68tn,” the CBN said in the report.
Although
the report did not give the identities of the 50 big bank debtors, it indicated
that non-performing loans in the period under review grew by 158 per cent from
N649.63bn at end-December 2015, to N1.678tn at end -June 2016.
The
NPL ratio rose to 11.7 per cent from 5.3 per cent, thus exceeding the
prudential limit of 5.0 per cent, it stated.
It
also said that as of June ending 2016, loans to oil and gas sector by the
banking sector had hit N4.5tn, representing 28.77 per cent of the total
industry loan.
The
CBN noted that the development did not augur well for the industry well-being.
The
81-page FSS report stated in part, “Credit exposure to the dominant sectors is
as follows: 28.77 per cent to oil and gas sector; 12.95 per cent to
manufacturing; 8.84 per cent to governments; and 8.69 per cent to general
commerce.
“Credit
risk is expected to trend higher into
the second half of 2016 owing to increased loan
impairments resulting from the depreciation of
the naira, inability of obligors to service
foreign currency-denominated loans, as well as bank exposures to the oil and
gas sector.”
A
total of N1.204tn loan was given to the oil and gas while N333bn was given some
state governments within the six-month period.
The
report stated, “At end-June 2016, loans to the oil and gas sector constituted
28.77 per cent of the gross loan portfolio of the banking system as
credit to that sector grew to N4.511tn, compared with N3.307tn at end-December
2015. Loans to state governments rose to N1,386.61bn from N1,053.97bn at
end-December 2015, as declining revenues continued to constrain
payment of salary by some states, funding of key services and execution
of developmental projects.
“This
was despite the CBN’s N338bn special intervention scheme designed to refinance
states’ debts, as well as a debt restructuring programme introduced by the Debt
Management Office, which enabled states to restructure their commercial loans
in the preceding period. However, to prevent further financial crisis, a
fresh facility of N90bn with a nine per cent interest rate was made available
to the states.”
According
to the CBN, the biting economic recession has made the market share of the five
biggest commercial banks in the country in terms of total assets to decline by
17.3 per cent in six months.
The
report read in part, “In terms of size of assets and deposit of banks, the
market share of the five largest banks in the first half of 2016 declined to
43.30 and 51.96 per cent, from 60.61 and 52.94 per cent in
the second half of 2015, respectively.
“The
market share of the largest bank’s deposits and assets stood at 12.84 and 13.52
per cent, respectively in the first half of 2016. The remaining 18 banks had
market shares ranging from 0.21 to 6.58 per cent in deposits and 0. 26 to 6. 41
per cent in assets, reflecting low competition in the market.”
Despite
the improvement recorded relative to the first
half of the year, the structure of the banking industry in
the first half of 2016 remained oligopolistic, according to the report.
Economic
and financial experts said the challenging economic situation had led to muted
low growth in the banking industry with most banks scaling down drastically on
their lending activities.
Most
banks, they added, were now being preoccupied with how to clean up their books
by recovering some of the huge NPLs in their books.
Source:The
Punch
Tags
Business