Peter Amangbo, chief executive officer, Zenith Bank, says the bank will expand retail loans by making a bigger push into personal loans, car financing and mortgages

ZENITH Bank Plc is increasing its focus on consumer lending as lower oil prices weigh on the economy, hurting its business customers. The bank is expected to expand retail loans as a percentage of total credit to about four percent this year from less than one percent in 2018.

Peter Amangbo, chief executive officer, Zenith Bank, in an interview with Bloomberg, said the bank will expand retail loans by making a bigger push into personal loans, car financing and mortgages. “There is a lot we’re doing on revenue. We expect our retail franchise to grow. Our electronic business, our digital banking is growing,” he said.

Zenith is making the shift as a 30 percent drop in oil prices since October hinders the nation’s main export and foreign-currency earner, damping demand for funding. Nigerian banks are increasingly tapping into digital technology to reach the 50 million unbanked people in a nation of 200 million, while protecting their turf from mobile-phone companies -which have three times as many customers and are bidding to offer money transfers.

Amangbo said the company would probably achieve loan growth of two percent to five percent in 2019 after missing its target last year. He said customer loans declined by eight percent in the nine months through September to N2 trillion. “We don’t see a very strong growth in the loan book in 2019,” he said. “Demand is still very weak.”

According to him, the bank plans to pay off a $500 million Eurobond maturing in April and won’t issue a new one due to the limited scope for dollar lending. “If the opportunity comes, we will go to the market, but now we will pay off that. Zenith Bank is still trying recover past loans to the oil and gas sector.”

The oil and gas industry accounted for 46 percent of non-performing loans in the third quarter of last year, and nearly a third of the bank’s total loan book. “I don’t think there is so much appetite to lend to the oil and gas space,” he said.

Concerns over a devaluation of the naira are also weighing on lenders’ desire to finance the industry, whose survival is tied to the availability of foreign exchange for raw material imports. Deposits are also not increasing, making funding for lenders expensive in the face of cash reserve ratios of 22.5 percent. “It takes some time for the economy to reset. As a bank, you’ll want to be cautious,” he said.

– Feb. 1, 2019 @ 15:35 GMT |