Nigeria’s second-biggest bank Zenith Bank Plc shifts its focus from loans to the oil and gas sector to consumer lending. Lower oil prices negatively affect economic system of the country.

According to Chief Executive Officer Peter Amangbo, the priority areas of bank development are  personal, car and housing loans. The amount of such loans was about 1% of total credit in 2018, this year it should be raised up to 4 percent. Analysts expect it would be profitable because their digital market is growing.

During the last 4 months oil prices collapsed 30 percent. Foreign exchange inflows have decreased and Nigerian banks pointed out digital technology to reach the 50 million unbanked people (it`s one quarter of the population of the country).

Zenith is still striving to reimburse past loans to the oil and gas sector. Due to financial reporting, 46% of loans were non-performing in the third quarter of 2018. Peter Amangbo expects that the bank is going to achieve up to 5% loan growth in the current year. This can be the maximum result because, according to his words, “there is so much appetite to lend to the oil and gas space”.

Despite this, bank is going to pay off a $500 million Eurobond maturing in April to meet their commitments.

Lenders are not ready to invest in oil and gas sector because they are afraid of naira devaluation owing to lack of foreign currency necessary for purchasing raw materials. Cash reserve ratios of 22.5 percent make it economically unprofitable to stock money on bank deposits.

Talking about the level of non-performing loans, the Chairman of Zenith Bank Plc, Mr. Jim Ovia said:  “NPL is something that banks worry about anywhere in the world, whether it is in the United Kingdom, in Africa or the US, there are NPLs. We don’t necessarily worry because it depends on how you are able to hedge against some of those risks. It depends on the industry, if it is oil, gas or trading, for us to be able to ameliorate those risks.”