Non-Performing Loans Hit N1.5tn As Banks Continues To Write Off Debts

Report showed that banks have continued to write off debts and debit accounts of recalcitrant debtors in other banks so as to tone down the volume of non-performing loans in their financial accounts.

According to the figures obtained from the Central Bank of Nigeria on Thursday, it showed 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.

In a report released by the CBN on personal comment of members of the MPC, it noted that, “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.”

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

According to the reports on banks, the capital adequacy ratio and Liquidity Ratio had remained above the minimum thresholds.

“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," it said.

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

“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," it said.