In the complex world of the Nigerian financial sector, Tier-1 banks, also called D-SIBs (Domestically Systemically Important Banks), play a crucial role in the country’s economy. These financial institutions, such as Ecobank Transnational Incorporated (ETI), United Bank for Africa (UBA), Access Holdings Plc, Zenith Bank Plc, FBN Holdings Plc and Guaranty Trust Holdings Company Plc (GTCO), possess systemic importance which may result in significant disruptions in the event of a crisis.
According to the Financial Stability Committee, D-SIBs have seen their loan portfolio increase dramatically in recent years. In 2023, the total amount lent by the big six banks increased by 67.3% to ₦36.8 trillion from ₦21.99 trillion the previous year, and well above the ₦18. 11 trillion in 2021.
A breakdown of loans granted by these D-SIBs in Africa reveals a significant distribution of amounts. Thus, ETI has granted a total of ₦19.17 trillion in loans, while Access Holdings customers have benefited from ₦17.3 trillion in advances between 2021 and 2023. For their part, Zenith Bank has granted ₦13 .9 trillion loans, FBN Holdings ₦13.03 trillion, UBA ₦7.29 trillion, and GTCO ₦6.17 trillion.
The financial reports of these banks reveal that ETI has been the most generous in terms of loans allocated to the main economic sectors. The oil and gas sector, manufacturing, energy, small and medium-sized enterprises (SMEs), real estate, information technology and communication are among the major sectors to have benefited from this financing.
In a context where the dynamism of D-SIBs is of capital importance for the economic fabric of Nigeria, it is crucial to closely monitor the evolution of these loans and their sectoral distribution. The impact of this financing on the sustainable growth and economic stability of the country cannot be underestimated. Transparency and accountability in the management of these loans are essential to ensure judicious use of funds and promote balanced development of the economy.
Ultimately, Nigerian D-SIBs play a crucial role in financing the national economy and deserve special attention due to their systemic impact. Vigilance and adequate regulation of these institutions are essential to ensure sustainable and balanced economic growth in Nigeria.