Nigerian banks can overcome challenges due to falling oil prices, say experts

Jun 01, 2015

They said they do not fear a repeat of the 2009 scenario.

The Nigerian banking sector is better equipped to face a decline in oil prices than in 2009, according to economists.

In Lagos, the crude barrel fell from $114 in June 2014 to $48 in January 2015 (from €101.70 to €42.80).

Moreover, the share of the hydrocarbon industry out of total loans at the largest institutions in Nigeria has doubled since 2008.

In 2009, the oil price drop has significantly reduced government revenue, resulting in the devaluation of the naira. It cost the Lagos stock exchange 70 per cent of its value, quadrupling the number of toxic assets.

"This time things are different," Adesoji Solanke, from Renaissance Capital investment bank, told newspaper Jeune Afrique. "The main portfolios in the Nigerian banking sector that have recorded an increase in bad debts in 2009 are less important today."

An opinion shared by Dolapo Oni, energy specialist at Ecobank: "Some loans will certainly be restructured and payments rescheduled to reflect changes in the revenues of oil companies but today the banking sector is better capitalised, and banks know the hydrocarbon industry better."

According to Renaissance Capital, loans granted by Nigerian banks should grow by 10 to 15 per cent this year.ADNFCR-2976-ID-801789394-ADNFCR