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Banks deduct debtors other accounts, non-performing loans hit N1.5tn - PUNCH

SEPTEMBER 29, 2023

Banks in the country have continued to write off debts and debit accounts of recalcitrant debtors in other banks in order to tone down the volume of non-performing loans in their financial accounts, The PUNCH has learnt.

Figures obtained from the Central Bank of Nigeria on Thursday, revealed that the non-performing loans in the banking sector stood at N1.5tn of N37.81 total credit in the sector as of the end of June 2023.

This represented 4.1 per cent of the loans in the period under review, according to the report.

A report released by the CBN on personal comment of members of the MPC said, “The non-performing loans ratio remained below the maximum prudential requirement of 5.0 per cent. It declined from 5.0 per cent in June 2022 to 4.1 per cent in 2023. The continuous decline in NPL was attributable to write-offs, restructuring of facilities, Global Standing Instruction and sound credit risk management.”

The CBN in 2020, released the GSI guideline to reduce non-performing loans in the banking sector and monitor consistent loan defaulters among others.

According to the CBN, the GSI allowed the banks to recover the outstanding principal and interest upon default from any account maintained by the debtor across all financial institutions in Nigeria.

On the banks, the reports said the capital adequacy ratio and Liquidity Ratio had remained above the minimum thresholds.

Although CAR decreased to 11.2 per cent in 2023 from 14.1 per cent, it remained above the 10.0 per cent prudential requirement, it stated.

It said, “The LR was also above the 30.0 per cent regulatory minimum ratio. It increased significantly from 42.6 per cent in June 2022 to 48.4 per cent in June 2023.”

The report said data showed that the banking industry’s total assets and gross credit to the economy had maintained their upward trends in June 2023.

It stated, “Total industry assets grew year-on-year by N30.92tn or 47.21 per cent to N96.4tn between end-June 2022 and end-June 2023. The upward trend in total credit to the economy stands at N37.81tn as of June 2023 and has increased by N10.75tn or 39.73 per cent between the end of June 2022 and the end of June 2023.”

According to the CBN, the credit growth had continued since 2019 following the CBN’s Loan-to-Deposit Ratio policy.


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