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LequteMan
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Nigeria- Oil companies account for 25 percent of bank lending in Nigeria, with First Bank, Nigeria’s largest lender, and Guaranty Trust Bank Plc among banks with the most at stake as tumbling oil prices strain the economy of Africa’s biggest crude producer.
Nigerian Banks had viewed the oil and gas sector as a key growth area for the country thereby investing heavily in the sector, Bloomberg reports.
“The outlook for Nigerian banks is very linked to what happens to oil prices,” said Adesoji Solanke, a banking analyst in Lagos at Renaissance Capital Ltd. “Oil prices have significant economic implications for Nigeria, which eventually feed through to the banks.”
“They’re probably going to suffer from all sides – loan growth, revenue growth and NPLs,” said Kapilan Theiventhirampillai, an analyst based in London. “They’ve been the worst performers this year compared to their peers in the Middle East and Africa. They’ve been smashed.”
However, Solanke said Nigerian banks will probably avoid revisiting the events of the 2008 and 2009 oil crash, when the state intervened to rescue some lenders.
“For us to see a repeat of 2009, the oil sector really has to blow up,” he said
First Bank has structured its oil loans, which form 40 percent of its portfolio, so that they can be serviced “at prices well below current market rates,” said Chief Risk Officer Abiodun Odubola.
Guaranty’s lending to the oil industry has dropped from 28 percent to 22 percent since the end of September, spokesman Lashe Osoba said.
Skye, which has almost a third of its loans with petroleum companies, doesn’t expect defaults to increase at current prices, said spokesman Rasheed Bolarinwa.
#Nigeria
Nigerian Banks had viewed the oil and gas sector as a key growth area for the country thereby investing heavily in the sector, Bloomberg reports.
“The outlook for Nigerian banks is very linked to what happens to oil prices,” said Adesoji Solanke, a banking analyst in Lagos at Renaissance Capital Ltd. “Oil prices have significant economic implications for Nigeria, which eventually feed through to the banks.”
“They’re probably going to suffer from all sides – loan growth, revenue growth and NPLs,” said Kapilan Theiventhirampillai, an analyst based in London. “They’ve been the worst performers this year compared to their peers in the Middle East and Africa. They’ve been smashed.”
However, Solanke said Nigerian banks will probably avoid revisiting the events of the 2008 and 2009 oil crash, when the state intervened to rescue some lenders.
“For us to see a repeat of 2009, the oil sector really has to blow up,” he said
First Bank has structured its oil loans, which form 40 percent of its portfolio, so that they can be serviced “at prices well below current market rates,” said Chief Risk Officer Abiodun Odubola.
Guaranty’s lending to the oil industry has dropped from 28 percent to 22 percent since the end of September, spokesman Lashe Osoba said.
Skye, which has almost a third of its loans with petroleum companies, doesn’t expect defaults to increase at current prices, said spokesman Rasheed Bolarinwa.
#Nigeria
