Global business rating organization, Ernst and Young has ranked Nigerian banks in the frontier category of the latest barometer of regional banking in emerging markets.
The ranking according to Ernst and Young’s leader of financial services, West Africa, Dayo Babatunde, was based on the Gross Domestic Product (GDP) of banks in emerging countries.
He Explained that Nigeria is ranked in the frontier category where countries with maximum GDP of $2000 are placed. “Nigeria’s GDP as 2011 stood at $1,200 and this indicates there is a lot of room for growth, hence the global interest of investors in Nigerian banks” he stated.
He noted that the banking barometer report discovered that Nigerian banks have a massive opportunity for credit expansion and a huge number of Nigerians are still unbanked.
The report also highlights poor infrastructure investment and possibility of social unrest.
Ernst and Young’s Regional Managing Partner West Africa, Henry Egbiki, added that by 2017, Nigeria’s GDP would have reached $2,000 and there will be more demand for finance and product financing.
This, he claims will give more opportunities to global banks with bigger balance sheets to increase Nigeria banks capitalization which will enhance their capacity to make more regional impact beyond the domestic focus.
Banks in Nigeria were urged to lend more to small businesses and the real sector for improved economic growth as Mr Babatunde also advised the bank’s regulators to reduce the level of cost of funds compared with other countries as this adversely affect the growth sector as against a fledging banking sector.
“If there is a growth in the nation’s banking sector at the expense of the real sector then there is danger ahead” he warned.
The ten countries ranked in the report are Nigeria, Vietnam, Egypt, Colombia, Indonesia, Chile, Malaysia, South Africa, Mexico and Turkey