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Ecobank Cuts Loans To Entertainment, Transport Sectors, As Other Markets Become Vulnerable

Ecobank Cuts Loans To Entertainment, Transport Sectors, As Other Markets Become Vulnerable

Ecobank Cuts Loans To Entertainment, Transport Sectors, As Other Markets Become Vulnerable!

Ecobank froze loan approval to some sectors in the first quarter of 2021 and also reduced loans approved to banks during the same period after the COVID-19 pandemic affected its market focus.

Ripples Nigeria gathered from the company’s recently released 2021 Q1 financials, that loans to customers declined during the period under review, as Ecobank gave out N3.64 trillion loan by Q1 ending.

This reflected a 1.4 percent drop compared to the corresponding period when the company provided N3.69 trillion as loans to customers. It was also learnt that Ecobank reduced outgoing loans provided to banks as well.

The reduction in loans to customers occurred despite account holders increasing their deposit into the company by one percent.

A statement from Ecobank, said the decision was influenced by credit restructuring and providing payment moratoriums to customers to avoid bad debts.

It had also conducted stress test to determine sectors and products that are vulnerable to COVID-19 pandemic. The lender had stated that the pandemic affected the markets it conduct businesses.

Tourism, transport, retail, and entertainment were some of the markets mentioned by Ecobank. In response to its stress test, the bank froze further lending in some sectors and Financial Institutions after identifying specific vulnerable obligors across the businesses.

“We conducted stress tests to determine the sectors, countries, and products most vulnerable to the Covid-19 pandemic and its fall out. We identified specific vulnerable obligors across the businesses. As a result, we froze further lending in some sectors and Financial Institutions.

“To ensure a consistent and systematic engagement across the Group, we issued policy guidance. Group Risk Management provided guidance to help manage the loan portfolio during the COVID-19 crisis. The guidance lists the sectors that were deemed to be vulnerable to the economic impact due to the COVID pandemic” The bank stated.

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