Banks’ non-performing loans fall to 9% – CBN

The non-performing loans of the banks fell by six per cent from 15 per cent in June 2017 to nine per cent in May 2019, the Central Bank of Nigeria said.

It stated that Capital Adequacy Ratio for the banking industry improved from 11 per cent in June 2017 to over 16 per cent in May 2019 and liquidity levels had also increased by over 20 per cent within the same period.

The bank said, “In addition, the ratio of non-performing loans in the banking system has reduced from 15 per cent in June 2017 to nine per cent in May 2019, due to concerted efforts by the CBN and the Deposit Money Banks, although more work is being done to moderate NPL levels to the maximum prescribed level of five per cent.

“Our financial institutions are well-positioned to perform their intermediation role, which will ultimately help in supporting the growth of our economy.”

According to the bank, the drop-in commodity prices affected a good number of banks given their exposure to the oil and gas sector.

Unfortunately, it added, these resulted in an increase in non-performing loans of its banks.

As a result of risk management measures embarked upon by the CBN, it added, capital adequacy and liquidity ratios of commercial banks were now above the prudential level.

Banking sector’s non-performing loans stood at N1.676tn as of the end of March 2019, the latest statistics from the National Bureau of Statistics revealed.

The gross loans recorded in the banking sector stood at N15.480tn, while the loans after specific provisions stood at N13.739tn in the period under review.

The ratio of the non-performing loans to total loans was 10.83 per cent, while non-performing loans to total loans after specific provisions was 12.2 per cent.

The figure of non-performing loans at the end of 2018 was N1.792tn, while the gross loans and loans after specific provisions were N15.353tn and N13.562tn respectively.