The CEO of Zenith Bank Plc, Ebenezer Onyeagwu, has corroborated earlier forecasts and reports about how the COVID-19 pandemic is bound to adversely affect the Nigerian banking industry.
Speaking to CNBC Africa, Onyeagwu stated that one of the most immediate impacts of the Pandemic is the fact that the oil price crash will have negative implications for banks’ revenue targets.
“In terms of banking, the drop in the price of crude is affecting directly the exposure that banks have created in the oil and gas sector. Revenues are challenged now, no doubt. And you have a situation where revenues are challenged, the obvious next step will be for you to restructure,” Onyeagwu stated.
He also noted that the situation will remain very challenging until there is a vaccine to remedy the virus. For now, efforts are being made to flatten the curve by preventing further spread of the virus. And while this effort continues, banks are not expecting much growth. He said:
“In this moment too, as far as banking is concerned, we are also going to experience the fact that we don’t expect a situation where there will be growth in loan books. Loan growth will be challenged. World Bank’s screen now is on different sectors of the economy and how the COVID impacts them restructuring the loan book. The Central Bank has even given a dispensation to this effect, asking banks to come up with the various proposals they have for the restructuring of the loan book.”
He then disclosed that there have been some positives arising from the COVID-19 pandemic. According to him, Zenith Bank has recently witnessed a massive increase in the number of businesses being transacted through various digital channels. Apparently, customers who were hitherto disinterested in digital banking are now showing interest.
The Zenith Bank CEO then clarified that the pandemic is not only affecting the banking industry alone. It affects every aspect of the economy, he said.
“In a situation where you have a lockdown of the economy, if you lock down all the agents, there is no way business volumes will not be bad or impacted.”
Zenith Bank’s profit before tax rose by 3% to N58.7 billion in the first quarter of 2020, according to an earlier article published by Nairametrics.