Nov. 7 (Bloomberg) -- Zenith Bank Plc, Nigeria’s second-largest lender by assets, said it expects to increase loans to the country’s privatized power companies as the government seeks to end blackouts in Africa’s biggest oil producer.
Loans to the power industry may rise to 10 percent of the bank’s total book by next year, up from 4.3 percent in the third quarter and 1.3 percent at the end of June, Chief Executive Officer Godwin Emefiele, 52, said in an interview yesterday at the bank’s headquarters in Lagos, Nigeria’s commercial capital.
President Goodluck Jonathan handed control of 14 power plants in September to buyers including Munich-based Siemens AG and Forte Oil Plc to secure funding for the facilities and end daily electricity cuts in sub-Saharan Africa’s second-biggest economy.
“Opportunities in power opened up and we took advantage of it,” Emefiele said. “It is a very essential utility that we all need for our survival.”
The value of Zenith Bank’s loans to power companies was about 40 billion naira ($252 million) in the third quarter after the handovers, said Emefiele. Zenith Bank gave loans to companies including Eko Electricity Distribution Company and Ikeja Electricity Distribution Company both in Lagos state, which is Nigeria’s most populated, with about 22 million people.
“As we review the companies and we see viable propositions, yes we will” expand loans to the industry, he said.
Zenith Bank reported nine-month net income rose 16 percent to 68.9 billion naira from a year earlier, with revenue advancing 12 percent. The lender expects “steady growth” next year, with total loans rising 15 to 20 percent, Emefiele said.
The stock retreated 1.1 percent to 21.45 naira at the 2:30 p.m. close in Lagos. Zenith Bank has risen 10 percent this year as of the close yesterday in Lagos, lagging behind the 36 percent gain in the Nigerian Stock Exchange All-Share Index.
The Central Bank of Nigeria, which has kept its key interest rate at a record high of 12 percent for two years to stabilize the naira and curb inflation, is unlikely to ease policy next year before elections in 2015, he said.
“There’s going to be a lot of spending and the central bank has a lot of work to do in controlling the spending so that it doesn’t spiral into interest rate effects too,” Emefiele said.
Central bank Governor Lamido Sanusi warned in September of an increasing demand for dollars being used for political patronage before elections.
The regulator based in the capital, Abuja, may cut rates once demand for foreign currency is under control, reserves rise and oil prices remain high, Emefiele said.
“If I see these parameters under control then I’d expect the central bank to say ‘ok let’s ease a little’ so as to free some liquidity to the banks to now lend to the productive sectors of the economy,” he said.
To contact the reporter on this story: Chris Kay in Lagos at email@example.com