Zenith leads as Banks loans to customers rise in Q1, 2020

Zenith Bank leads other banks in the country in the area of increased loans to customers in the first quarter of 2020, accounting for N275.2 billion of the over N1 trillion increase of banks total loans to customers which hit N18.9 trillion in the quarter under review.

In total, the tier-1 bank’s loans to customers stood at N2.6 trillion as of March 31st, 2020.

First Bank came in second in terms of biggest loan disbursement in Q1 2020. There was a 10.74 per cent increase (or N198.9 billion addition in loans), which saw the tier-1 bank’s total loans to customers jumping to more than N2 trillion, up from N1.8 trillion as of December 2019.

United Bank for Africa Plc came in third with N195.2 billion, followed by Guaranty Trust Bank Plc with N121.3 billion. Figures for the rest of the banks can be seen in the table below.

The increased in banks’ loan to customers in the first quarter of 2020 may be partly due to the Central Bank of Nigeria’s Loan to Deposit Ratio (LDR) which was increased to 65 per cent, up from 58.5 per cent.

Recall that the Central Bank of Nigeria (CBN) had in July 2019 increased banks’ Loan to Deposit Ratio (LDR) to 60 per cent, up from 58.5 per cent.

Three months afterwards, the LDR was again increased to 65 per cent, even as speculations were rife that it would further be increased to 70 per cent. The apex bank later issued a circular announcing that LDR would be retained at 65 per cent which is the current level.

The main reason the CBN increased the LDR in the first place was to facilitate the provision of credit facilities to the real sector of the economy. The CBN incentives assigned a weight of 150 per cent in respect of lending to SMEs, retail, mortgage, and consumer lending. Lenders are required to fully comply or risk attracting a levy of additional Cash Reserves Requirements of 50 per cent of the lending shortfall of the target LDR.

However, it remains to be seen whether the loan figures will grow during the second quarter of the year, considering the challenges that have faced the Nigerian economy during the period.