(Ecofin Agency) – With the agreement of the Central Bank of Nigeria, commercial banks operating in the country are currently restructuring loans worth $ 20 billion to their customers. The results for the first half of 2020 will make it possible to see a first impact of covid-19 on the balance sheets.
7800 billion naira ($ 20 billion) in loans to 35,640 customers in Nigeria are being restructured by banks operating in this country, we learn from Bloomberg which quotes Godwin Emefiele (photo), the governor of the Central Bank of this country. “If the Central Bank did not ask the banks to grant this measure to their customers, the loans would deteriorate immediately according to our prudential ratios”, said Mr Emefiele.
This restructuring represents 41% of the total outstanding loans granted to the Nigerian economy, which at the end of June 2020 was 18.9 trillion naira, according to the press release of the Monetary Policy Committee held on July 20, 2020. The governor of the Central Bank hopes that a restructuring ratio between 60% and 65% can be achieved.
The Nigerian banking sector is experiencing an unprecedented moment in its history. The health and economic crisis caused by covid-19 encountered a series of challenges, particularly in relation to the exposure of banks to the oil sector. The pandemic has extended the scale of the problem to all sectors.
For now, we will have to wait for the publication of the results of the second half of the year of listed banks to get an idea of the scope of the problems encountered in the second quarter.
In this uncertain environment, the Central Bank invites banks to grant ever more credit. In the month of June 2020 alone, 3.3 trillion naira in new loans were granted. Although this figure is significant, it ultimately only represented a 1.6% increase in money supply. However, the authorities’ wish is to see this indicator increase by at least 13%.