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Tuesday, October 01, 2019 / 12:59PM / By Emele Onu of Bloomberg/ Header Image Credit: Pinterest
The central bank in July gave banks until
the end of September to show that they use at least 60% of their deposits for
loans, or risk being punished with more onerous cash-reserve requirements. The
measure was among a raft of regulations aimed at forcing banks to boost credit
-- mainly to farmers, small- and medium-sized businesses and consumers -- as
President Muhammadu Buhari's administration seeks to reignite economic growth.
Central Bank of Nigeria Governor Godwin Emefiele has said banks that
haven't complied will be sanctioned by Oct. 1.
Nigerian
lenders increased loans by more than 800 billion naira ($2.2 billion) in a bid
to avert sanctions, including to industries targeted by the government,
Abdullahi said, without giving details. Total credit extended by the banking
industry amounted to 15 trillion naira at the end of 2018, according to data
compiled by the country's statistics agency.
The deadline draws to a close at the end
of the day with only two out of the nation's six biggest banks meeting the
requirements as of June 30. The firms had lost some of their appetite to extend
credit after bad loans surged in the wake of a crash in crude prices, but are
now starting to make headway into consumer lending amid the constant pressure from
regulators.
The short notice given to banks to comply with the rule, as well as
desperation to avert sanctions, probably led some of the lenders to trim the
interest rates they charge on loans, compressing margins, Lamin Manjang, the
chief executive officer for Standard Chartered Plc's Lagos-based subsidiary,
said earlier this month.
Lenders
including Guaranty Trust Bank Plc, United Bank for Africa Plc and FBN Holdings
Plc, which fell short of the requirement by end of the first half, didn't
respond to requests for comment on their current loan ratios.
The Nigerian Stock Exchange Banking 10 Index, which measures the movement in the share prices of the country's biggest lenders, rose 1.6% on Monday to close at the highest level since Sept. 23. That pared losses this year to 14%.
Credit: The
post Nigerian
Banks Tried, But 'Not All' Made New Loans Threshold first appeared
in Bloomberg on September 30, 2019
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