New remittances policy’ll deepen bank customers’ trust — Ecobank MD – Punch

The Managing Director/Regional Executive, Ecobank Nigeria Limited, Mr Patrick Akinwuntan, speaks with ’FEMI ASU on the impact of COVID-19 on the Nigerian banking sector, among other vital industry issues

How has the COVID-19 pandemic affected the Nigerian banking sector?

The COVID-19 pandemic came with lots of uncertainties regarding the duration, the extent of impact and how it will pan out in terms of impact on the overall economy and global supply chains and then the financial markets. There was quite significant uncertainty at the beginning but as various countries took steps quickly first on the health front through various lockdowns and protocols, the financial industry saw the need to take major steps to stimulate the economy to withstand the impact of such lockdowns and shocks to the system.

In Nigeria, the central bank was very responsive and immediately provided guidance in terms of palliative, intervention funds, and moratorium, as well as leading or galvanising the private sector to also participate in significant corporate social responsibility to support the households in particular.

So, for the banking industry, it was a question of how the economy would pan out and how we can sustain growth in engaging with our customers. Then we moved quickly into identifying the most vulnerable sectors and how the banking industry would support them.

It became very clear that the hospitability, aviation, manufacturing and agricultural sectors were going to be largely impacted. Therefore, the industry moved into stimulating the economy with more credit to the various sectors and reduced the cost of funds. This was led by the central bank, which reduced the cost of funds from nine per cent to five per cent for intervention facilities, with a drive towards a single-interest rate regime in order that the productive segment is able to bear the brunt of the impact of the pandemic.

But for us specifically at Ecobank, we immediately deployed our business contingency plans, which involved the ability to provide services and working remotely because our customers depend on us for their daily payments and collections. We also made sure that we actually support our customers by reviewing the interest rates on their loans downwards so that the burden of carrying their economic activities was reduced by granting them moratorium – those that qualified for a moratorium in principal repayment and interest repayment so that the arrival rate of their obligations matches the cash flow of their operations.

We also, because we are a member of the Ecobank Group, which is a pan-African institution, collaborated with the African Union and the New Partnership for Africa’s Development to provide finance, mentoring and technical knowledge for the micro, small and medium-scale enterprises because they needed a close support to understand how to deal with this unusual pandemic.

We had invested significantly in digital platforms across Africa and in Nigeria in particular, enabling our corporate customers to use Omni Plus and Omni Lite for payments and collections; the SMEs using EcobankPay for their payments and collections, and the households and individuals being able to use our Ecobank Mobile, Ecobank USSD and our agency banking, EcobankExpress, which we took to various neighbourhoods. In fact, last year, we moved from 6,000 agency locations to 20,000.

There was increased lending by banks to the economy last year, with the total credit rising to N25.02tn as of December, according to the CBN. The non-performing loan ratio also increased to 6.01 per cent from 5.88 per cent in November. How do banks ensure that there is no further deterioration in their loan portfolios, given the economic fallout of the pandemic?

I think first, it will be fair to say that the Nigerian economy before the pandemic, had key areas that were being worked on following the economic meltdown of 2015/2016 as a result of oil crisis.

That growth agenda, including financial…