During the first half of this year, at least four banks collectively reported non-performing loans amounting to N478 billion in their financial results.
Specifically, Guaranty Trust Bank Holding Plc (GTCO), FBN Holdings Plc, and two other banks disclosed non-performing loans valued at N478.93 billion in the half-year ending in June 2023.
This figure marked an increase of nearly 16 percent compared to the N413.36 billion reported for the full year ending December 31, 2022.
The two additional banks involved are FCMB Group Plc and Fidelity Bank Plc.
FBN Holdings, with a non-performing loan ratio of about 4.3 percent and gross loans & advances totaling N5.26 trillion, reported N226.24 billion in non-performing loans during H1 2023, up from N204.29 billion in 2022. In 2022, the holdings declared a 5.4 percent non-performing loan ratio and N3.79 trillion in gross loans & advances.
GTCO reported N115.29 billion in non-performing loans as of H1 2023, an increase from N102.37 billion reported in the 2022 financial year.
They noted that their IFRS 9 Stage 3 loans decreased to 4.6 percent (Bank: 3.6 percent) in H1-2023 from 5.2 percent (Bank: 4.7 percent) in 2022, with Individuals and Others sectors having the highest NPLs, at 20.9 percent and 30.96 percent, respectively.
Additionally, Fidelity Bank reported N84.73 billion as of H1 2023, up from N61.37 billion, while FCMB group declared N52.66 billion in non-performing loans as of H1 2023, compared to N45.01 billion in 2022.
Banks in the country have been actively writing off non-performing loans, alongside debiting the accounts of defaulting debtors to reduce the volume of these non-performing loans.
In 2020, the Central Bank of Nigeria (CBN) released the Global Standing Instruction (GSI) guideline to address non-performing loans in the banking sector and monitor persistent loan defaulters, among other measures.
The GSI enables banks to recover outstanding principal and interest from the accounts of debtors across all financial institutions in Nigeria upon default.
A report by the CBN, based on comments from a Monetary Policy Committee member, Kingsley Obiora, during the latest MPC meeting, indicated that the capital adequacy ratio (CAR) and Liquidity Ratio (LR) remained above the minimum regulatory thresholds.
Although CAR decreased to 11.2 percent in 2023 from 14.1 percent, it remained above the 10.0 percent prudential requirement.
The LR also exceeded the 30.0 percent regulatory minimum ratio, increasing significantly from 42.6 percent in June 2022 to 48.4 percent in June 2023.
