L
LequteMan
Guest
According to Citigroup’s Head of Frontier Market Banks and Research, Josh Levin, Nigerian banks are on the verge of another credit crisis.
Speaking at the Citi Media summit in London, the economist said this was caused by what he described as deteriorating macro conditions in the country.
“Nigerian banks have made a lot of loans to the oil and gas industry. About 25 to 30 per cent of the bank loans went to the oil and gas sector. So as the price of the oil plunges, there will be a lot of concerns about the ability of the borrowers to service the loans, because the cash flow of the borrowers goes down.
“The big issue at the moment for banks in Nigeria is Nigerian banks are on the verge of another credit crises. Alternatively, you could say, how well are Nigerian banks positioned to whether the deteriorating macro conditions in the country. The macro environment has really deteriorated over the past 15 months; so, what’s going on, the price of oil has plummeted. Even though Nigeria directly derives only a 15 per cent of its GDP from the oil industry, Nigeria derives roughly 80 per cent of its tax revenue from oil. So the low oil price, certainly negatively impacts the country’s economy.”
He noted that the consequence of this is the slowing loan growth; adding, “when the GDP goes high, loan growth goes high, when the GDP goes down, the loan growth tends to slow.”
He said the deteriorating macroeconomic environment is negatively affecting the Nigeria banks although there is no crisis indication yet in the banks’ second quarter results declared in July. According to him, from the results, the credit metric reported by the banks are not accurate and insisting that the banks are playing games with the numbers.
ThisDay
Speaking at the Citi Media summit in London, the economist said this was caused by what he described as deteriorating macro conditions in the country.
“Nigerian banks have made a lot of loans to the oil and gas industry. About 25 to 30 per cent of the bank loans went to the oil and gas sector. So as the price of the oil plunges, there will be a lot of concerns about the ability of the borrowers to service the loans, because the cash flow of the borrowers goes down.
“The big issue at the moment for banks in Nigeria is Nigerian banks are on the verge of another credit crises. Alternatively, you could say, how well are Nigerian banks positioned to whether the deteriorating macro conditions in the country. The macro environment has really deteriorated over the past 15 months; so, what’s going on, the price of oil has plummeted. Even though Nigeria directly derives only a 15 per cent of its GDP from the oil industry, Nigeria derives roughly 80 per cent of its tax revenue from oil. So the low oil price, certainly negatively impacts the country’s economy.”
He noted that the consequence of this is the slowing loan growth; adding, “when the GDP goes high, loan growth goes high, when the GDP goes down, the loan growth tends to slow.”
He said the deteriorating macroeconomic environment is negatively affecting the Nigeria banks although there is no crisis indication yet in the banks’ second quarter results declared in July. According to him, from the results, the credit metric reported by the banks are not accurate and insisting that the banks are playing games with the numbers.
ThisDay
