The price fluctuation in the international oil market has caused Nigerian commercial banks to reduce their exposures in the oil and gas sector. Currently, the aggregate exposure of banks in the oil and gas industry is N12.22 trillion.
The reduction in the number of loans allocated in the oil and gas sector represents a decrease of 13.4 percent compared to the figure recorded in 2024, which stood at N15.7 trillion.
Based on an audit of the financial performance of the largest banks in Nigeria, there was a significant contribution of the oil and gas sector to non-performing loans, hence the need for loan loss provisions to comply with the guidelines issued by the Central Bank of Nigeria.
These banks include FBN Holdings, Access Holdings, Guaranty Trust Holding Company (GTCO), United Bank for Africa (UBA), Zenith Bank, Fidelity Bank, Wema Bank, FCMB Group, Sterling Financial Holdings Company, and Stanbic IBTC Holdings.
Though the oil and gas exposure of the banks declined overall, two institutions had the highest exposure. For instance, Zenith Bank registered a massive reduction in its exposure to the sector by 36.8 percent to N2.59 trillion from N4.11 trillion.
Fidelity Bank recorded exposure to the oil and gas sector amounting to N1.91 trillion, indicating a slight decrease. This was because Fidelity Bank cut down exposure owing to lower exposure to the oil and gas sector.
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GTCO showed an increase in exposure of 39 per cent to N1.59 trillion, mostly because of the increased exposure to the upstream and natural gas segments of the sector.
However, on aggregate, the total gross loans and advances for the 10 banks increased by 14.7 per cent to N56.05 trillion, with the oil and gas sector making up 21.8 per cent of total advances. Access Holdings was the leader in terms of total loans, having N13.69 trillion in total loans and advances.
However, the decrease in exposure is in a context of diverse performance of the international oil market. Despite increased production by OPEC+, oil prices were rather strong owing to supply chain disruptions caused by sanctions on Russia and Iran. The average price of Brent crude stood at $68.16 per barrel, which was below Nigeria’s $75 per barrel benchmark price.
While the country produced around 1.6 to 1.7 million barrels of oil per day, falling short of the budgeted production rate of 2.12 million barrels of oil per day caused financial strain.
The National Bureau of Statistics data revealed that the contribution of oil to the GDP was 3.53 per cent in 2025, compared to the previous year where there was slight improvement despite challenges such as price uncertainty, geopolitical issues, and lower production at the end of the year.
According to analysts, the oil and gas industry faces challenges ranging from volatility of prices, geopolitical issues, and local production issues which have made commercial banks hesitant in funding the sector. However, they assert that the industry is profitable for Nigeria, making the banking industry still fund the sector.
