Ecobank, Zenith, Access, 8 other banks loan N38.55 trillion to customers in 6 months

Despite CBN's high interest rates, eleven banks in Nigeria saw their cumulative lending surge by 50% in the first six months of 2023.

The banks' financial statements revealed that the combined loans and advances of the banks increased to N38.55 trillion in the first half of 2023 compared to N25.85 trillion in the same period in 2022, Legit.ng report showed.

Analysts believe that the bulk of the spike in the banks' loan books is due to the naira devaluation as most of the banks have a large portion of their loan books in foreign currency, implying that if converted to the exchange rate, the naira equivalent will be higher.

Ecobank Transnational leads the banks with the highest customer loans, followed by Access Bank, Zenith Bank, United Bank for Africa, Fidelity Bank, Guaranty Trust Bank, and First Bank.

The increase in the banks' lending occurred because customers would need loans in H1 despite the high interest rates set by the CBN, BusinessDay reports analysts as saying.

The Monetary Policy Rate (MPR) is the rate at which the CBN lends to commercial banks and often determines the cost of the funds in the economy.

Loans to increase further as CBN tightens policies

The apex bank began its monetary policy tightening circle in May last year, with its benchmark interest rate rising from 11.5% to 18.75% in July. There are worries that the CBN will continue to increase interest rates to overcome inflation, which has worsened reportedly due to the new reforms of President Bola Tinubu.

Nigeria's primary inflation drivers were the petrol subsidy removal and the naira floating. Ecobank led the pack with the highest loans and advances to customers with N8 trillion in H1, reflecting a 103.8% increase from the year before.

Other banks with the highest loans to customers Access Bank increased its loans by 45.2% to N6.71 trillion, while First Bank increased its lending to N5.26 trillion from N3.38 trillion.

Zenith Bank saw a 44% rise in its lending to N5.05 trillion, UBA gave out loans to customers amounting to N4.5 trillion, Fidelity Bank gave customers N2.65 trillion in loans, GTBank released N2.32 trillion to customers as loans, and Stanbic IBTC gave customers N1.66 trillion as loans in the first six months of 2023.

FCMB saw its loans to customers increase by 37.5%, reaching N1.54 trillion in 2023, while Wema Bank doled out N627 billion and Unity Bank gave customers loans amounting to N199 trillion.