Mustapha Chike Obi
By Steve Omanufeme
Contrary to popular concerns that Nigeria's financial services industry is experiencing another round of loan growth, which may lead to increased non-performing loans, the Managing Director of the Asset Management Corporation of Nigeria (AMCON) has said that loan growth in Nigeria is still very slow.
"People always talk about loan growth. I think loan growth in Nigeria is muted. I think loan growth should be higher than it is now. It is muted because of the CBN tight monetary policy on lending typified by the hike in cash reserve requirement for deposit money banks (CRR) for both public sector funds and private funds. That has dampen loan growth," he said.
In an exclusive interview with THISDAY, he said the issue of loan growth is always misconstrued as a direct cause of defaults.
"The issue about loan growth is that it does not necessarily lead to defaults. The CBN has a sensible loan policy which requires any bank with NPL over five per cent to bring it down either by provision or selling them. That has kept NPL ratio to an average of 3.8 per cent which is very low by all measures in the world," he pointed out, adding that total banks assets to GDP, is very low in Nigeria when compared to other economies.
On the bridged banks, he said the banks have done well and does not see any difference in performance in terms of return on assets from those of other peer banks.
"In terms of return on assets their performance is comparable with that of banks in the same tier. So I don't see any diminishing return as they have been run professionally. I think we should give credit to people who are managing the banks."
He added: "Again I don't see any difference in terms of customer experience in Mainstreet Bank, Enterprise Bank and Keystone Bank, and that of may be Skye Bank and other banks in the same tier. We all bank in the same similar terrain. For tier one banks it may be different."
He said the sale processes of Enterprise and Mainstreet Banks are at an advanced stage.
"The bidding offers are ready but we have not seen them. Our advisers will submit them probably this week. Once they are submitted, we will review them and make a selection. So, the sale of the banks is almost completed, about 90 per cent complete," he said.
Though the 2013 results are yet to be published, the bridged banks' strides towards improved asset quality and profitability can be gleaned from their audited results for the year ended December 31, 2012. The three banks returned to profitability in the period under review after recording losses the previous year
For instance, Enterprise Bank recorded Profit-Before- Tax (PBT) of N11.3 billion from the year ended December 31, 2012, a marked improvement from the loss of N5.2 billion for the five-month period it operated as at December 2011.
The bank's gross earnings grew by 284 per cent to 40.4 billion in 2012 from N10.5 billion achieved in the five-month period ended 2011. The bank’s deposit also grew from N162.6 billion to N208.4 billion between the year ended 2011 and 2012 respectively, representing a growth of about 28.2 per cent.
Total assets on the other hand rose by 31 per cent between the periods from N198.5 billion as at end of 2011 to N261.1 billion as at the end of 2012.
For Keystone the 2012 results indicated that its total assets for the period grew by seven per cent, from N361.48 billion to N388.23 billion. Gross earnings of the bank rose by 157 per cent, from a loss of N13.79 billion to N7.81 billion, while customer deposits leapt from N282.75 billion to N297.54 billion during the review period.
On the part of Mainstreet, the 2012 results showed that it posted a profit before tax of N23 billion, gross earnings of N47.90 billion and net interest income of N23.83 billion.
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