Despite rising Non-Performing Loans (NPLs) and global oil market uncertainties, nine Nigerian banks ramped up their exposure to the oil and gas sector in 2024, reaching a combined N15.6 trillion—up by 94.4% from N10.17 trillion in 2023.
The banks—Access Holdings Plc, Guaranty Trust Holding Plc (GTCO), Zenith Bank Plc, United Bank for Africa (UBA) Plc, FBN Holdings Plc, Fidelity Bank Plc, Wema Bank Plc, FCMB Group Plc, and Stanbic IBTC Holdings Plc—also saw their total gross loans and advances rise by 39.8% to N53.15 trillion.
Zenith Bank led the charge with a reported N4.11 trillion in oil & gas exposure, more than doubling its N2.11 trillion exposure in 2023. First Holdco followed with N3.34 trillion, up from N2.19 trillion, while Access Holdings reported N2.07 trillion, marking a 41.3% increase.
However, the aggressive lending has raised concerns over asset quality. First Holdco’s NPL ratio surged to 10.2% in 2024 from 4.7% in 2023, far exceeding the Central Bank of Nigeria’s 5% benchmark.
“The growth in NPLs is driven primarily by only one oil and gas loan,” First Holdco stated, adding that “excluding the oil and gas name, the NPL ratio would have been 5.4%. Proactive steps have been taken to sustain the resilience of our balance sheet.”
Access Holdings’ loan distribution also reflected shifting focus: its oil & gas upstream loans rose to 7.9% in 2024 from 6.3%, while services dropped to 4.3% from 6.3%.
Despite lower-than-expected oil production and fluctuating global prices—Bonny Light crude averaged $77 per barrel in December, down from $80.76 in January—analysts believe the sector remains critical.
“Banks are meant to lend to key sectors in the economy,” said David Adnori, Vice President of Highcap Securities Limited. “The increased exposure shows oil and gas is still lucrative, especially as IOCs exit the Nigerian market.”
Nigeria’s oil production ended 2024 at about 1.5 million barrels per day, missing the 1.78 million benchmark set in the national budget. The sector’s contribution to GDP also slipped slightly to 4.6% in Q4 2024 from 4.7% in the same period in 2023.
Industry players say 2024 brought structural changes due to divestments and acquisitions.
“We are witnessing an uptick in Foreign Direct Investment (FDI),” said Tominiy Owolabi, MD of Olaniwun Ajayi LP. “The government’s National Gas Expansion Programme shows a commitment to energy transition and resilience.”
Still, oil price forecasts for 2025 remain cautious. Brent is expected to average around $74 per barrel amid supply concerns, energy transition pressure, and geopolitical uncertainty.
