Having found some form of stability around the $60/bbl level for a few months, global oil prices seem to be back under pressure with Brent trading around the $50/bbl region – a 57% decline from its June 2014 high of $115/bbl.

With the significant loan exposure of Nigerian banks to the oil and gas sector (average of 25% of total loan portfolio - as at H1’15), the risk of absolute default or any form of restructuring remains a threat to banks’ performance as we believe the full impact might trickle down in bits due to the possible lag time between economic difficulty and default.

Hence, the question on everyone’s mind is “can banks weather this storm?” The not easily forgotten experience of the 2008/2009 crisis further compounds investors’ anxiety. Whilst we believe that the scenarios are somewhat similar to the past oil price crash, analysts at Vetiva Capital Management Limited in Victoria Island are of the opinion that banks are better prepared to manage the situation due to relatively stronger risk management frameworks and increased regulatory awareness.

Source: http://www.ebtsconsults.com/2015/10/analyst-opinion-challenges-are-real.html