Several Nigerian banks have faced the brunt of economic challenges, with at least four of them collectively reporting non-performing loans (NPLs) amounting to N478 billion during the first half of this year.
This unsettling figure emerges from their recently released financial results.
Notably, Guaranty Trust Bank Holding Plc (GTCO), FBN Holdings Plc, and two other prominent banks disclosed N478.93 billion in non-performing loans by value in the half-year ending in June 2023.
This marks a worrying 16% increase from the N413.36 billion reported for the entire year ending on December 31, 2022.
The two additional banks grappling with bad loans are FCMB Group Plc and Fidelity Bank Plc.
In terms of specifics, FBN Holdings, with a non-performing loan ratio of about 4.3% and gross loans & advances totaling N5.26 trillion, reported N226.24 billion in NPLs by value in H1 2023, compared to N204.29 billion in 2022.
GTCO disclosed N115.29 billion in NPLs by value as of H1 2023, up from N102.37 billion in the 2022 financial year.
In its presentation to investors and analysts, GTCO noted, “The Group’s IFRS 9 Stage 3 loans closed at 4.6% (Bank: 3.6%) in H1-2023 from 5.2% (Bank: 4.7%) in 2022. Individuals and Others emerged as sectors with the highest NPLs, at 20.9% and 30.96%, respectively.”
Meanwhile, Fidelity Bank reported N84.73 billion as of H1 2023, up from N61.37 billion, while FCMB Group declared N52.66 billion in NPL value as of H1 2023, compared to N45.01 billion in 2022.
In addition to facing growing bad loans, Nigerian banks have continued to write off non-performing loans, and they have also debited the accounts of defaulting debtors to reduce the volume of NPLs.
The Central Bank of Nigeria (CBN) introduced the Global Standing Instruction guideline in 2020 to address non-performing loans, monitor consistent loan defaulters, and improve the banking sector’s health.
According to the CBN, the GSI enables banks to recover outstanding principal and interest from any account held by the debtor across all financial institutions in Nigeria upon default.
Despite the challenges, a report from a Monetary Policy Committee member, Kingsley Obiora, indicated that the capital adequacy ratio and liquidity ratio for banks remained above the minimum thresholds, providing some stability amid the NPL concerns.
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