By Milcah Tanimu
Amidst the prevailing economic challenges, the first half of this year saw at least four banks in Nigeria reporting non-performing loans (NPLs) amounting to N478 billion, as indicated in their financial results.
Notably, Guaranty Trust Bank Holding Plc (GTCO), FBN Holdings Plc, and two other banks collectively reported N478.93 billion in NPLs during the half-year ended June 2023. This marked an increase of nearly 16 percent from the N413.36 billion reported for the full year ending December 31, 2022.
The other two banks contributing to this figure are FCMB Group Plc and Fidelity Bank Plc.
FBN Holdings, with a 4.3 percent NPL ratio and N5.26 trillion in gross loans and advances, reported N226.24 billion in NPLs during H1 2023, compared to N204.29 billion in 2022. In 2022, the holdings declared a 5.4 percent NPL ratio and N3.79 trillion in gross loans and advances.
GTCO declared N115.29 billion in NPLs during H1 2023, up from N102.37 billion reported in the 2022 financial year. According to GTCO’s presentation to investors and analysts, “The Group’s IFRS 9 Stage 3 loans closed at 4.6 percent (Bank: 3.6 percent) in H1-2023 from 5.2 percent (Bank: 4.7 percent) in 2022. With Individuals and Others emerging as sectors with the highest NPLs i.e., 20.9 percent and 30.96 percent respectively.”
Furthermore, it was noted that non-performing loans grew marginally to N115.3 billion in H1-2023 from N102.8 billion in 2022. This growth was primarily attributed to exchange rate impacts as the Group continued to deleverage in Ghana and Kenya while derecognizing fully provided facilities in the Nigerian book.
Meanwhile, Nigerian banks have been consistently writing off non-performing loans and debiting the accounts of persistent debtors in an effort to reduce the volume of NPLs. In 2020, the Central Bank of Nigeria (CBN) introduced the Global Standing Instruction (GSI) guideline to address NPLs in the banking sector and monitor consistent loan defaulters, among other purposes. The GSI allows banks to recover outstanding principal and interest upon default from any account maintained by the debtor across all financial institutions in Nigeria.
Despite these challenges, a report from the CBN stated that the capital adequacy ratio (CAR) and liquidity ratio of banks remained above the minimum thresholds. Although CAR decreased to 11.2 percent in 2023 from 14.1 percent, it remained above the 10.0 percent prudential requirement.
