UBA, FBN Holdings, Others Sustain NPL Ratio Below Regulatory Threshold

Nume Ekeghe

Despite myriad economic challenges, several leading Nigerian banks managed to maintain a Non-Performing Loan (NPL) ratio below the five per cent threshold set by the Central Bank of Nigeria (CBN) during the first quarter (Q1) of 2023.

The banks include FBN Holdings Plc, United Bank for Africa (UBA) Plc, Union Bank of Nigeria Plc, Fidelity Bank Plc, Zenith Bank Plc and Stanbic IBTC Holdings Plc.

Analysis of all financial institutions results showed that FCMB Plc was the only bank that had an NPL ratio above the CBN requirement.

Recent numbers released by the CBN disclosed that NPLs in the banking sector was sustained at 4.2 per cent and 4.4 per cent at end-February and end-April 2023, below the supervisory minimum of 5 per cent over a 12-month period.

The central bank had disclosed that average NPL ratio in the banking sector closed 2022 at 4.2 per cent from 4.9 per cent in 2021, attributable to write-offs, restructuring of facilities, Global Standing Instruction (GSI) and sound credit risk management by banks.

With over N3.79 trillion gross loans & advances to customers as of March 31, 2023, FBN Holdings declared 4 per cent NPL ratio in Q1 2023 from 4.30 per cent in 2022, while UBA announced increase in NPL ratio to 3.40 per cent from 3.10 per cent in Q1 2022. 

Zenith Bank maintained 4.30 per cent NPL ratio in Q1 2023 as Union Bank reported 4.50 per cent NPL ratio in Q1 2023 from four per cent reported in 2022 financial year. 

In the period under review, Fidelity Bank reported 3.60 per cent NPL ratio as against 2.90 per cent in 2022, as Stanbic IBTC NPL increased to 2.50 per cent in Q1 2023 from 2.40 per cent in 2022. 

The CBN has however called on banks managers to take caution while lending to real sector.

The Deputy Governor, Financial System Stability, CBN, Aisha Ahmad stated that the key industry aggregates also continued year-on-year upward trajectory with total assets rising by 25.12 per cent to N77.59trillion in February 2023 from N62.01 trillion in February 2022, while total deposits rose to N49.36 trillion from N39.38 trillion over the same period. 

“Notably, this impressive increase was achieved with continued decline in NPLs ratio. Notwithstanding the strong financial system fundamentals and satisfactory stress test results, the Bank must remain vigilant and proactively manage emerging risks to financial system stability, especially with the challenging global economic and financial environment,” she said.