FCMB Group Plc plans to restructure half of its loans after plunging oil prices, the coronavirus lockdown and a naira devaluation hindered the ability of the Nigerian bank’s clients to repay their debt.
Credit facilities across industries ranging from oil and gas to small- and medium-sized enterprises will be reorganized, the Lagos-based lender said in a presentation on Tuesday. New terms will include a six-to 12-month moratorium on principal debt repayments and an extension on loan maturities of up to two years.
Plummeting crude prices have dealt a hammer blow to the economy of Africa’s largest oil producer, just as the outbreak of Covid-19 shutters businesses and the movement of people to contain the spread of the disease.
Authorities devalued the local currency by 4% against the dollar in March and are under pressure to weaken the naira even further amid a shortage of greenbacks and lower export revenues.
The measures by FCMB come after impairment charges surged 61% to 3.7 billion naira ($9.6 million) in the first quarter, according to a filing to the Nigerian Stock Exchange. Loans in the period rose 7% to 764.3 billion naira from a year earlier.
The lender plans to increase impairments to offset losses in unhedged upstream assets in the oil and gas industry, it said. About 37% of the bank’s customers have foreign-currency loans and earn income in naira, so the lender will convert those into the local currency, FCMB said.
