Indications have emerged that industrialists and entrepreneurs may continue to suffer lack of access to loans from deposit money banks in 2013.

A  report by Fitch obtained by our correspondent on Monday said, “We expect loan growth to be subdued until second half of 2013, as the market adjusts to the higher interest rates following the expiration of the inter-bank guarantee from the Central Bank of Nigeria last year.

“The higher interest rates reflect heightened lending risks in the inter-bank market and greater competition for funds. The 91-day Nigerian treasury bill yield jumped to the 13 per cent-16 per cent range in October 2011, having traded below 10 per cent during the previous 12 months.”

  Fitch said that the marked slowdown in loan growth in the Nigerian banking sector reduced the pressure on asset quality and capital, adding that a more pedestrian pace of credit origination had helped the banks to avoid asset-quality problems and placed less strain on capital.

“The high interest rates helped to stabilise the currency but have dampened both loan supply and demand. Underlying credit, excluding loans sold to the Asset Management Corporation of Nigeria and write-offs grew on average by a rapid 44 per cent in 2011 for the banks we rate,” it said.

Fitch noted that majority of the banks were refraining from unnecessary risk-taking while the borrowers adjusted to higher costs.

It said, “The stabilisation in credit growth reduces a build-up of risk so soon after the balance sheet clean-ups in 2010 and 2011 where non-performing loans were transferred to AMCON.

“Credit booms in Nigeria have historically involved a relaxation of underwriting standards and an accumulation in portfolio concentration for the banks. We believe a slower pace of loan growth lowers the risk of a relapse in NPLs.”

In July 2009, a few months prior to the CBN’s intervention in the banking system, the regulator guaranteed all inter-bank transactions and foreign credit lines for nine months.

The guarantees were extended to December 31, 2010, then twice again to June 2011 and September 2011.

Thereafter, the guarantees were extended to end-2011, but limited to the banks that had met the recapitalisation deadline and, subsequently, banks that were taken over by AMCON.

Source: Punch (written by Ademola Alawiye)