CBN Says Bank Lending to Oil Firms Rises to N7tn

The Central Bank of Nigeria has disclosed that the combined bank lending to oil firms operating in the downstream and upstream subsectors of the Nigerian oil and gas industry was N6.62tn as of December 2022.

While operators in the downstream, natural gas and crude oil refining subsector owed banks N4.71tn, operators in the upstream and services subsectors were indebted to banks to the tune of N1.91tn.

The total debt rose by 110.83 per cent from N3.14tn in 2016 to N6.62tn in 2022.

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While the debt has increased significantly over the years, the oil and gas sector still struggles to service its debt and defaulting on loans.

This has raised banks’ exposure to non-performing loans in 2022, according to an analysis of the financial statements of Guaranty Trust Bank, United Bank for Africa, Zenith Bank, Ecobank Nigeria, Fidelity, and WEMA Bank.

An NPL occurs when the borrower fails to make scheduled payments for a specified period.

The 2022 financial statements of the Guaranty Trust Bank showed that N21.6bn was recorded as NPLs from firms in the oil and gas sector (midstream and downstream).

GTB’s NPLs stood at 5.19 per cent of total loans disbursed. With a total sum of N1.92tn loaned in 2022, N102.3bn was recorded as NPL, with the oil and gas sector taking 21.21 per cent of the total.

While UBA did not state the value of its NPLs for 2022, it noted that 16 per cent of the total unpaid loans for the year was held by the oil and gas sector.

For Zenith Bank, the oil and gas sector had a share of 44.3 per cent of the NPLs, representing N78.66bn. The total NPLs for the bank stood at N177.3bn for the 2022 financial year.

In 2022, Ecobank Nigeria recorded $179.7m as NPLs, with the oil and gas sector accounting for 35 per cent of the total, equating to $62.8m.

A review of Fidelity Bank’s half-year financial statements shows that the oil and gas sector accounted for N4.82bn of the bank’s total NPLs or 8.9 per cent of its total NPL.

For WEMA Bank, the oil and gas industry accounted for N5.11bn of the total NPLs for a half-year period.