Commercial banks’ loan exposure to government hits N1.8 trillion

As commercial bank loan portfolio exceeds 20tr

The total commercial loans to the government, at all levels, rose to N1.77 trillion at the close of last year, about 18 per cent increase from the N1.5 trillion reported in December 2019.
This comes as the total outstanding commercial loans written by the banks rose to N20.4 trillion in December, putting the exposure to government alone at 8.7 per cent.
The figures are contained in the industry data released by the National Bureau of Statistics (NBS) yesterday.  Public sector loans have increased steadily despite caution that the governments’ rising penchant for domestic loans is inadvertently crowding out the private sector. Manufacturers have pointed out access to funding as one of the major challenges limiting their competitiveness and responsible for the high rate of business closure.   

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At the turn of 2019, public sector loans stood at N1.4 trillion, rising through the year to settle at N1.5trillion in December. Last year, the country also witnessed a continuous build-up of advances to the public sector. It stood at N1.6 trillion at the end of September 2020 with the last quarter adding about N0.2 trillion.

The two-year moving average of government share of the total commercial loans was 8.5 per cent, which was among the highest apart from oil/gas and manufacturing. 

Oil/gas exploration and manufacturing enjoyed generous loans, receiving N3.9 trillion and N3.2 trillion respectively. Their share of the total banks’ loan portfolios 19.3 per cent and 15.7 per cent respectively.    Agriculture credits were also reasonably high at N1.05 trillion as of December 2020.

The troubled power and energy sector is among the least funded with a paltry N0.44 trillion facility. According to the data, the total non-performing loan (NPL) increased moderately from 6.01 per cent to 6.02 per cent year-on-year (YoY), which is 1.02 percentage points above the five per cent industry’s benchmark. 

The NPL has retraced from its peak of about 38 per cent recorded in 2010 but yet to fall within the Central Bank of Nigeria (CBN)’s target.

In its executive summary, the report said: “A total volume of 3,464,811,083 transactions valued at N356.47 trillion was recorded in Q4 2020 as data on electronic payment channels in the Nigeria banking sector revealed. Online transfers dominated the volume of transactions recorded; 2,227,449,949 volume of online transfer transactions valued at N120.27 trillion were recorded in Q4 2020.”

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According to the report, the total number of banks’ staff reduced by 0.9 per cent, from 95,888 to 95,026, between October and December. 


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