An examination of the Loan books of Nigeria’s banks in 2012 revealed essentially that banks in an effort to capture a larger market share expanded their credit activities. Banks are set to conquer the uphill task of penetration in selected key market segments. Oil & Gas (O&G), Manufacturing and General Commerce sectors constituted the bulk of lending activities, altogether accounting for more than half, 50.5 per cent of the total loans disbursed, up from 49.8 per cent in 2011.
Oil & Gas industry remained the largest consumer of loans, accounting for 22.0 per cent of the total loans disbursed by the commercial banks, up from 20.6 per cent in 2011. It was followed by Manufacturing sector at 14.9 per cent, down from 15.8 per cent in 2011. General Commerce constituted 13.6 per cent of the total loans disbursed in 2012, up from 13.5 per cent in 2011.
Information and Communication sector drew in 8.8 per cent of the total loans disbursed in 2012, down from 9.2 per cent in 2011. General industry accounted for 7.8 per cent in 2012, down from 8.4 per cent in 2011. Government sector constituted 7.3 per cent of total loans in 2012, up from 5.8 per cent in 2011. Government sector recorded the highest percentage increase of 160bps year over year.
Agricultural sector witnessed a marginal expansion in credit facilities constituting 3.9 per cent of the total loans disbursed in 2012. Key sectors like Power & Energy continues to remain oblivion of credit facilities constituting just 1.6 per cent of the total loans disbursed in 2012. However, this is expected to change with the privatization of power sector. The latest development in the power sector is anticipated to create increased asset generation opportunities for banks. Education sector failed to attract banks and constituted only 1.7 per cent of the total loans disbursed in 2012.
Loan Composition of Individual Banks: Top-3 Sectors
In 2012, O&G constituted 29.3 per cent of the total loan portfolio of Access bank, followed by manufacturing sector at 21.8 per cent and general commerce at 14.9 per cent.
Diamond bank disbursed 25.4 per cent of its total loan portfolio to the O&G sector, 13.2 per cent to manufacturing sector and 20.3 per cent to general commerce.
Of the total loan portfolio of FCMB; O&G constituted 29.6 per cent, manufacturing constituted 7.5 per cent and general commerce constituted 14.4 per cent.
Fidelity bank disbursed 13.8 per cent of its total consumer loans to O&G sector, 12.4 per cent to manufacturing sector and 19.5 per cent to general commerce activities.
O&G constituted 19.1 per cent of the total loans disbursed by UBA in 2012, manufacturing constituted 12.2 per cent and general commerce constituted 8.1 per cent.
Union bank disbursed 17.4 per cent of its total consumer loans’ portfolio to O&G, 5.7 per cent to manufacturing and 15.4 per cent to general commerce.
Of the total consumer loans’ portfolio of Zenith bank; O&G constituted 16.8 per cent, manufacturing accounted for 24.1 per cent and general commerce accounted for 7.9 per cent.
Skye bank disbursed 24.4 per cent of its total consumer loans to O&G sector, 4.7 per cent to manufacturing industry and 17.5 per cent to general commerce.
The composition of the consumer loan portfolio of StanbicIBTC was as follows; O&G constituted 11.5 per cent, manufacturing industry constituted 24.3 per cent and general commerce constituted 18.1 per cent.
Bankers to the Sectors
Businesses in different industries can approach different banks for their credit requirements based on the composition of the loan portfolios of individual banks. Most of the banks followed the industry-wide trend; however, within themselves some banks had a larger loan concentration in some sectors compared to their counterparts’ share in that particular sector. For instance; across all the banks analysed, Union bank had the largest percentage concentration of agricultural loans at 11.4 per cent. Fidelity disbursed the highest percentage of loans to the construction industry (at 8.8 per cent of its total consumer loans’ portfolio) and Education sector (at 10.7 per cent) when compared to other banks. Similarly, Diamond bank had the highest percentage portfolio of general commerce loans at 20.3 per cent. Fidelity bank emerged as the banker to the government sector with 13.6 per cent of loans disbursed to the sector in 2012. Stanbic’s loan portfolio was inclined towards to manufacturing sector which constituted 24.3 per cent of its total loan portfolio. Stanbic was also the banker for transport & storage industry with 17.6 per cent of its total loans disbursed to that industry.
Loan portfolios of most of the banks remained O&G and manufacturing sectors heavy at large; however, Fidelity, UBA, Union and Zenith were outliers. Fidelity loans portfolio was most inclined towards the General Commerce industry. General industry accounted for the largest loan portfolio for UBA. Real estate was the industry which Union bank focused on during disbursing loans in 2012. Manufacturing loans constituted the highest percentage of the total consumer loans disbursed by Zenith in 2012.
This is an extract from the forthcoming “Nigerian Banking Industry Report 2013”, BusinessDay Research and Intelligence Unit (BRIU)
By: Ruchi Gupta