Banks’ NPL Sustains Decline at 4.2%, Assets Up 24.24% to N73.59trn

Nume Ekeghe

The Central Bank of Nigeria (CBN) has stated that the non-performing loans (NPLs) in the nation’s banking sector have sustained a decline further below the regulatory benchmark of 5 per cent to 4.2 per cent at the end of December 2022.

This decline, furtherance from 4.9 per cent recorded in September 2022 was highlighted in the personal statements of the members of the Monetary Policy Committee (MPC) released by the CBN on its official website over the weekend.

Also, the total assets of the banking industry grew by N14.36 trillion or 24.24 per cent from N59.24 trillion in December 2021 to N73.59 trillion in December 2022.

In his personal statement, the Deputy Governor, of Economic Policy at the CBN, Dr. Kingsley Obiora noted that the banking system remains sound, safe, and resilient.

He said: “Industry Non- performing Loans decreased from 4.9 per cent in December 2021 to 4.2 per cent in December 2022, which was below the maximum prudential requirement of 5.0 per cent. The decline in NPLs was attributable to write-offs, restructuring of facilities, Global Standing Instruction (GSI) and sound credit risk management by banks.

“Total assets of the banking industry grew by N14.36 trillion or 24.24 per cent from N59.24 trillion in December 2021 to N73.59 trillion in December 2022, driven by balances with CBN/banks, investments, and credit expansion to the real sector. As a result, total gross credit increased by N5.14 trillion or 20.93 per cent between the end of December 2021 and December 2022, from N24.57 trillion to N29.72 trillion, due to the increase in the industry funding base as well as the CBN’s directive on LDR, which has encouraged banks to increase lending to the real sector of the economy, and business strategy and competition. The increase in credit to the key sectors of the economy is expected to bolster aggregate demand and promote economic growth, job creation, and poverty alleviation.”

On his part, another MPC member, Aliyu Ahmed, added: “Financial Soundness Indicators revealed salutary outcomes in the review period. Industry Capital Adequacy Ratio (CAR) at 13.8 percent at end- December 2022 was above the 10 percent prudential requirement. Liquidity ratio at 44.1 percent was above the 30 percent regulatory requirement. Also, Non-Performing Loans improved to 4.2 per cent in the review period, compared with the regulatory minimum of 5 percent. Return on Equity (ROE) and Return on Assets (ROA) both rose by 20.2 percent and 1.6 percent in December 2022, from 18.4 and 1.5 percent in September 2022, respectively.”