The
concentration of loan portfolio in the banking industry in few sectors poses
systemic risk for the economy, according to Afrinvest, a foremost investment
banking firm, which released a report on the Nigerian banking sector yesterday.
Looking
at the loan portfolio of the industry, the report shows that there is a huge
concentration of risk based in the power sector and the oil and gas sector,
meaning that the increase in lending does not cut across all sectors of the
economy.
Total
loans to the power sector in 2013 was about $1.3bn for Discos and $1.7bn for
Gencos. Additionally, it is expected that $5.8bn would be the loan figure for
FY 2014 to the power sector.
The
Afrinvest report further points to the increase in the balance sheet of the CBN
from $11.4bn in 2011 to $19.2bn in 2013; with the significant increase coming
from AMCON bonds.
This
implies that the CBN would be unable to afford a bailout should there be
another banking crisis if power sector firms are unable to service their loans
The
report shows that
