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Big Banks’ Lending Decline As Small Banks Grow Loan Book

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Although banks had promised to increase their lending in 2018 as the country exited recession, their books are yet to reflect it as loans and advances to customers have consistently been on the decline particularly amongst the big banks.

Guaranty Trust Bank, Wema Bank and Zenith Bank last week released their nine months unaudited results indicating a decline in loans and advances in the two big banks although there had been a rise in customer deposit, while Wema recorded a 16 per cent increase in its lending.

The results posted by the banks showed that lending by both Zenith and GTBank had declined by 15.4 and 14.5 per cents respectively. GTBank’s loan book as at September 30, 2018 had dropped to N1.27 trillion when compared to the nine months period of 2017 when it N1.488 trillion  but had risen significantly by 17.5 per cent when compared to the N1.08 trillion recorded at the end of the 2017 financial year.

Managing director and chief executive of GTBank, Segun Agbaje, earlier in the year said the bank hopes to improve its loan to deposit and borrowings from 58.9 per cent recorded in 2017 to 70 per cent by the end of 2018 as it looks forward to a 12 per cent growth in deposits.

According to him, the drop in Treasury Bill yields is expected to challenge banks to focus more on their traditional roles of intermediation as more funds will go to lending rather than trading government securities.

He said bank will be cautious of growing its loan book in 2018 in contributing to the growth of the economy, explaining that the bank had not grown its loan book aggressively in the last year because it was cautious of increasing its non- performing loan portfolio.

Zenith Bank’s loan book however, remained on the downward trend  albeit slower as it stood at N1.824 trillion as at September 2018, 15.4 per cent lower than N2.155 which it was in the comparable period of 2017 and 13.1 per cent lower when compared with N2.1 trillion which it recorded as at December 31, 2017.

The declining level of loan had seen the interest income of these banks decline as Zenith bank recorded a N339.06 billion interest income in the nine months period ending September 30, 2018, a 6.3 per cent decline when compared to N361.79 billion made in the comparable period of 2017. Specifically, it made N214.060 billion from interests on loans and advances to customers an amount that is lower than N240.999 billion which it made in the nine months period of 2017.

GTBank also saw its interest and similar income decline from N248.27 billion which it made in the nine months period of 2017 to N237.54 billion in the nine months period of 2018. Specifically, it made N143.462 billion from interests on loans and advances to customers an amount that is lower than N153.688 billion which it made in the nine months period of 2017.

Nine months unaudited result of Wema Bank showed that it saw increases in deposits, loans as well as interest income. Customers deposit with the banks as at September 30, 2018 stood at N362.27 billion a 44 per cent improvement over N250.92 billion that was recorded in the comparable period of 2017.

Its loan book had also grown to N244.79 billion from N210.86 billion which it was at the end of the 2017 nine months period. The bank which saw a 72 per cent rise in profit recorded an interest income of N38.88 billion in 2018 as against N37.47 billion recorded in the comparable period of 2017. Wema Bank had recorded a profit after tax f N2.64 billion for the nine months period ending September 30, 2018 compared to N1.52 billion it recorded in the comparable period of 2017.





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