RENCAP: Asset quality at risk if oil prices fall below $60 per barrel
Renaissance Capital Africa forecasts Nigerian banks’ Non-Performing Loans and Cost of Risk will face upward pressure this year if oil prices fall below $60 per barrel given their significant exposure to the oil and gas sector. Meanwhile, the Investment bank in its report highlights the risk of a global recession has spiked as economic activity is expected to slow amid escalating trade tensions. Olumide Sole, Head of Financial Institutions Research, Renaissance Capital Africa joins CNBC Africa for more.
Mon, 14 Apr 2025 14:09:07 GMT
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AI Generated Summary
- Renaissance Capital Africa warns that Nigerian banks could face asset quality challenges if oil prices fall below $60 per barrel
- Nigerian banks have significant exposure to the oil and gas sector, making them vulnerable to oil price fluctuations
- The risk of a global recession due to escalating trade tensions could further impact Nigerian banks and the broader economy
Renaissance Capital Africa has issued a warning that Nigerian banks could face significant challenges with their asset quality if oil prices drop below $60 per barrel. The investment bank highlighted the fact that Nigerian banks have substantial exposure to the oil and gas sector, making them vulnerable to fluctuations in oil prices. Olumide Sole, Head of Financial Institutions Research at Renaissance Capital Africa, emphasized the potential impact of a global recession on economic activity due to escalating trade tensions. Sole's insights shed light on the risks facing Nigerian banks in the current economic climate. With the potential for increased Non-Performing Loans and Cost of Risk, Nigerian banks are bracing themselves for a challenging year ahead. The implications of these developments extend beyond the financial sector, with broader implications for the Nigerian economy as a whole.
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