African Reserves Loans

Agusto & Co forecasts 16.5% growth in loans to the banking sector

Agusto & Co. Limited, a pan-African credit rating agency and market intelligence provider, forecast lending in the banking sector to increase by 16.5%.

It revealed this in its “2022 Nigerian Banking Sector Annual Report”, which provided a comprehensive review of the Nigerian banking sector and near-term expectations for the industry.

He said, “Agusto & Co. notes positively the resilience shown by the Nigerian banking sector in the financial year 2021, with the sector’s loan book growing by 21% despite the weak economy and constraints. regulations.

“Despite global supply constraints, the Russia-Ukraine crisis and insecurity issues that continue to hamper food and crude oil production in Nigeria, we expect loan growth of 16.5% year-on-year in 2022, as more banks now have a better understanding of macroeconomic headwinds.

He said traditional sectors such as oil and gas, manufacturing, general trade and agriculture sectors are expected to drive loan growth given the upstream integration initiatives of obligors, intervention of the Central Bank of Nigeria and the import dependent nature of the Nigerian economy.

While arbitrary cash reserve deductions and currency illiquidity would remain limits to the growth of the industry’s loan portfolio, he noted that more banks were now favorably disposed to access the differentiated reserve window of cash to reduce the value of barren restricted funds with the CBN. .

He said that “in the near term, we believe the sector’s asset quality will remain acceptable, with the impaired loan ratio hovering around 6% as of December 31, 2022.”

“In our view, a proactive tightening of controls around loan origination and increased loan monitoring will mitigate the impact of the difficult operating climate on the loan portfolio.”

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