The marked drop in loan growth in the Nigerian banking sector reduces the pressure on asset quality and capital and that’s according to international rating agency, Fitch.
Fitch says it expects loan growth to be subdued until 2013, as the market adjusts to higher interest rates following the expiration of the interbank guarantee from the Central Bank of Nigeria last year.
The higher interest rates reflect heightened lending risks in the inter-bank market and greater competition for funds.
The agency believes a more pedestrian pace of credit origination helps the banks avoid asset-quality problems and places less strain on capital.
