By Jeph Ajobaju, Chief Copy Editor
Private sector bank credit rose by N1.29 trillion to N31.44 trillion in the first quarter of 2021 (Q1 2021), according to Central Bank of Nigeria (CBN) data, which shows their compliance with rules that they loan to the real sector to oil economic growth.
Commercial and merchant banks disbursed N660 billion in Q1 2021, microfinance banks (N130 billion), development finance institutions (N50 billion), and primary mortgage banks and finance companies (N10 billion).
Credit to the private sector increased from N30.15 trillion in Q4 2020 2020 to N31.44 trillion in Q1 2021. Loans to the government dipped by N410.7 billion.
Nairametrics articulates that
· Total bank credit rose by N880.65 billion, from N42.55 trillion in Q4 2020 to N43.44 trillion Q1 2021.
· Credit o the government slashed by N410.62 billion, from N12.4 trillion to N11.99 trillion.
· Currency in circulation reduced by N99.73 billion to N2.81 trillion in Q1 2021.
Liquidity determinants
The Monetary Policy Committee (MPC) of the CBN previously announced that banking sector credit in Q1 2021 was N23.53 trillion against N22.68 trillion in Q4 2020.
Nairametrics reports that the CBN is quickening economic recovery from the recession in Q3 2020 caused by pandemic lockdown by encouraging banks to offer more credit to manufacturing.
According to the CBN, the factors that determined liquidity in Q1 2021 include
· Fiscal disbursements and withdrawals by states and councils
· Periodic CRR debits
· Foreign exchange interventions
· Open market operations
· Maturing CBN bills
The net effect imposed liquidity constraints on the banking system.
Nairametrics recalls that credit survey report by the CBN earlier in the year projected an increased supply of secured and unsecured credits to households in Q1 2021.
Overall availability of credit to corporates increased in Q4 2020 and is expected to rise in Q1 2021 due to “changing sector-specific risk and market share objectives.”
The CBN continues to urge banks to sustain its tight prudential regime to further reduce non-performing loans.
The rise in credit to the private sector shows increased economic activity as Nigerians work through the economic hardship of most of last year. Gross Domestic Product (GDP) grew 0.51 per cent in real terms in Q1 2021.
However, the big question is, at what cost are these credits granted? A recent study shows that despite the CBN’s Loan-to-Deposit ratio policy, banks’ lending rates did not drop.
UBA tops competition with N178b loan grant
United Bank for Africa (UBA) loaned out N178.1 billion in Q1 2021 to top the list of banks that granted a total N689.5 billion loans, in a race for customers in which Stanbic IBTC coasted home second, and Fidelity Bank third.
Nine banks granted more than N20 billion loan each in response to pressure by CBN for greater customer access to facilities for economic growth.
Expansionary policies and growth plan are being pitched by the CBN to revive the economy and wipe out Covid impact on Africa’s largest economy.
Data compiled by Nairametrics Research shows that gross loans and advances by Nigerian banks rose from N17.06 trillion in Q4 2020 to N17.75 trillion in Q1 2021.
This translates as new N689.53 billion loan granted customers in Q1 2021 but is 33.3 per cent less than the N1.03 trillion advanced in Q1 2020.
Banks recorded 10.4 per cent decline in interest income in Q1 2021, probably attributed to CBN loosening interest rate benchmark to increase credit access.
The CBN reduced the MPR from about 14 per cent in 2020 to 11.5 per cent in Q1 2021, which was retained at its MPC meeting in May.
A decline in aggregate loans could indicate a collection of previous loans rather than non-issuance of new loans, explains Nairametrics in its analysis of loans and advances in Q1 2021 against interest income.
First-tier banks (FUGAZ) faced stiff competition from rivals Stanbic, Fidelity, and FCMB, a major reason why only two tier-1 banks made it to the top five.
The top lenders compiled by Nairametrics are
UBA (N178.1b)
UBA led the pack with new N178.08 billion loans to customers in Q1 2021. Its last reported financial statement shows gross loans at N2.73 trillion Q1 2021 against N2.55 trillion in Q4 2020, an increase of 7 per cent.
Its loan disbursement in Q1 2021 was less than the N195.3 billion in Q4 2020, and also dropped from N109.1 billion in Q1 2020 to N108.6 billion in Q1 2021.
Stanbic IBTC (N104.9b)
Stanbic IBTC offered the second-highest gross loans and advances in Q1 2021 with N105 billion.
Gross loans to customers rose from N625.14 billion Q4 2020 to N730.14 billion in Q1 2021. Disbursed loans increased 27.7 per cent compared to N82.2 billion in Q4 2020.
However, interest income dropped 23.5 per cent from N27.46 billion in Q1 2020 to N21.01 billion in Q1 2021.
Fidelity Bank (N100.1b)
Fidelity Bank ranked third with N100.15 billion loans and advances to customers in Q1 2021.
Aggregate loan rose from N1.33 trillion in Q1 2020 to N1.43 trillion in Q1 2021, a staggering 157.8 per cent increase against N38.85 billion Q1 2020.
However, its interest income declined 7.4 per cent from N42.3 billion in Q1 2020 to N39.15 billion in Q1 2021.
FBN Holdings (N82.31b)
FBN Holdings increased its loan offerings by N82.31 billion in Q1 2021 when gross loans stood at N2.3 trillion against N2.22 trillion in Q1 2020.
Lending to customers dropped 58.6 per cent compared to N198.9 billion in Q1 2020, and interest income dipped 25.3 per cent to N78.36 billion in Q1 2021.
FCMB (N63.31b)
FCMB lent N63.3 billion in Q1 2021, which shot its total loans to N886.09 billion.
Advances saw 30.9 per cent increase against N48.38 billion in Q1 2020.
But this did not translate into a rise in interest income as the bank posted N33.03 billion as interest income which was 13.8 per cent less than N38.33 billion in Q1 2020.
Loan advances by others
Zenith Bank (N62.45 billion)
Access Bank (N38.11 billion)
Sterling Bank (N35.65 billion)
Unity Bank (N21.14 billion)