BEWARE: BANKS LOAN LOSS PROVISION GROWING AGAIN.

In 2008 one of the main causes of the historic crash recorded at the Nigerian Stock Exchange was the high incidence of toxic loans and is impact on the financial health of banks.
Eventually, sanity was restored after the Central Bank and Nigerian Deposit Insurance Corporation bought these loans.
Now provision for loan loss seems to be growing once again at a time the Nigerian economy is not in best shape.
Thus, perhaps it is time to beware because of the eight banks that released figures to September in recent days, only two provided less for loan loss while six reported increase. More importantly, the very big ones viz First Bank and Zenith with premium quotation and UBA reported frightening growths.
FBN Holdings ( First Bank) reported the highest growth of 248.9% to N46638m from N13364m by September 2014, followed by UBA with 129.9% from N2347m to N5395m and Zenith, up 99.2 % to N9725m from N4882m.
compared to these, Ecobank;Guaranty Trust Bank (GTB), and Diamond Bank had modest increases of 48.1%; 35.4% and 32.7%  to N34673.9m; N8515m and N19490m respectively.
Top decrease was provided by Union Bank down 20.4% to N361515m provision and Skye bank which provided for N6398m down 14.9%.
However, when loan loss provision is related to matching closing loans and advances to customers, it becomes obvious that the ones with hefty growths were more or less catching up.
Of the eight banks Skye had the highest loan provision to Loans and Advances of 9.21% compared with 2.67% for Diamond, 2.44% for FBN; 1.51% for Ecobank and 1.23% for Union Bank.
UBA had the lowest ratio if 0.53% followed by Zenith and GTB at par with 0.64%.
HENCE:
* One item to watch out for as full year figures roll out about three months hence is the red light now flashing over loan loss provision growth.
Watch out too in the days ahead starting from tomorrow for our analysis of FBN, Diamond bank, Ecobank and Union Bank figures for nine months to September.

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