Zenith Bank Plc, Nigeria’s second-biggest lender by market value, has to immediately increase the loans it gives to people because its loan-to-deposit ratio fell short of the regulator’s minimum target.
Zenith bank’s loan book dropped 3% to N1.95 trillion ($5.4 billion) for the 6 months ending June, while customer deposits increased by the same percentage to 3.8 trillion naira. This pushed its loan-to-deposit ratio to 51.2% from 54.6% a year ago.
Central Bank of Nigeria last month asked lenders to use at least 60% of their deposits for loans by the end of September or face a penalty as it aims to fuel credit to grow the economy.
Zenith Bank in a statement said,
“We are creatively deploying new retail loan products to ensure we capture a reasonable share of the retail loan market,”
An increase in lending will also enable Zenith Bank to improve its non-performing loan ratio, which deteriorated to 5.3% from 5%, owing to the drop in credit in the first half.