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Non-performing loan ratio crashes to 13.4%

As economic recession continues to weigh on the banking sector, non-performing loans ratio in the banking industry has crashed further above the Central Bank of Nigeria’s five per cent threshold.

The NPLs ratio fell to 13.4 per cent in September 2016, up 11.7 per cent recorded in June 2016, according to a Bloomberg report.

The industry-wide NPLs ratio had hit 5.3 per cent in December 2015, exceeding the prudential limit of 5.0 per cent, the CBN Financial Stability Report for the first half of last year revealed.

Specifically, the NPLs in the period under review grew by 158 per cent from N649.63bn at end-December 2015, to N1.679tn at end-June 2016, the CBN report showed.

The Group Managing Director, Access Bank Plc., Mr. Herbert Wigwe, predicted that the level of troubled loans would continue to climb before an economic recovery in the second half of the year would bring relief to the banks.

First Bank of Nigeria Limited, the country’s biggest lender by assets, stood out among the largest banks with an NPL ratio of 22.8 per cent at the end of September last year.

Zenith Bank Plc., United Bank for Africa Plc. and Guaranty Trust Bank Plc. had the NPL ratios ranging from 2.2 per cent to 4.1 per cent.

Capital levels also decreased. The sector’s capital adequacy ratio fell to 14.7 per cent in June from 16.1 per cent in December 2015.

For big banks, which the CBN classified as having more than N1tn of assets, the ratio fell to 15.65 per cent, still above the requirement of 15 per cent.

Source: Punch

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