Banking Finance

Banks’ bad loans hit N478bn amid economic downturn

At least four banks recorded N478bn non-performing loans during the first half of this year, according to their financial results.
Specifically, Guaranty Trust Bank Holding Plc (GTCO), FBN Holdings Plc and two other banks reported N478.93bn non-performing loans by value in the half-year ended June 2023, an increase of nearly 16 per cent from N413.36bn reported in the full year ended December 31, 2022.
The other two banks are FCMB Group Plc and Fidelity Bank Plc.
With about 4.3 per cent NPL ratio and N5.26trn gross loans & advances, FBN Holdings reported N226.24bn NPL by value in H1 2023 from N204.29bn reported in 2022.
The holdings declared 5.4 per cent NPL ratio and N3.79trn gross loans & advances in the 2022 financial year.
GTCO declared N115.29bn NPL by value as of H1 2023 from N102.37bn reported in the 2022 financial year.
GTCO in its presentation to investors and analysts said, “The Group’s IFRS 9 Stage 3 loans closed at 4.6 per cent (Bank: 3.6per cent) in H1-2023 from 5.2per cent (Bank:4.7 per cent) in 2022. With Individuals and Others emerging as sectors with the highest NPLs i.e., 20.9 per cent and 30.96 per cent respectively.
“IFRS 9 Stage 3 loans grew marginally to N115.3bn in H1-2023 from N102.8bn in 2022, primarily driven by exchange rate impact as the Group continued to deleverage in Ghana and Kenya and carried out derecognition of fully provided facilities in the Nigerian book.”
In addition, Fidelity Bank reported N84.73bn as of H1 2023 from N61.37bn, while FCMB group declared N52.66bn NPL value as of H1 2023 from N45.01bn in 2022.
Meanwhile, banks in the country have continued to write off non-performing loans. This came as lenders also continued to debit the bank accounts of recalcitrant debtors in other to reduce the volume of non-performing loans.
The CBN in 2020 released the Global Standing Instruction guideline to reduce non-performing loans in the banking sector and monitor consistent loan defaulters among others.
According to the CBN, the GSI allows banks to recover the outstanding principal and interest upon default from any account maintained by the debtor across all financial institutions in Nigeria.
A report released by the CBN on personal comment of a Monetary Policy Committee member, Kingsley Obiora, during the last MPC meeting 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, he said.
He 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.”

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