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Deposit Money Banks’ record N1tr NPL in 2 years

Following dwindling global oil prices, Nigerian banks’ non-performing loans (NPL) have significantly risen to N1 trillion, the financial stability report (FSR) of the Central Bank of Nigeria (CBN) has revealed.

The FSR breakdown shows that in 2015, the NPL of the banking industry rose by 78.8 percent to N649.63 billion as against N363.31 billion recorded in 2014.

The report attributed NPL increase to the continued fall in oil prices during the review period as Bonny Light fell by about 60 per cent to $38.22 last year, leading to government austerity measures and stringent policy by CBN.

The FSR stated that: “Non-performing loans, in the period under review, rose by 3.36 per cent to N649.63 billion at end-December 2015, from N628.54 billion at end-June 2015.

“This reflected a 78.8 per cent increase from the N363.31 billion recorded at end-December 2014. The NPL ratio rose to 4.86 per cent from 4.65 per cent. Although the NPL ratio remained within the prudential ceiling of five per cent, it trended closer to the upper limit.

“A few banks had NPL ratio above the regulatory maximum limit of five per cent; however this posed no significant risks to the industry.”

The report added that, “The increase in the NPL ratio was attributed largely to the continued fall in oil prices during the review period. For instance, the price of Nigeria’s reference crude, Bonny Light, fell by about 60 per cent to $38.22 at end-December 2015fromUS$62.01at end-June 2015, and this reduced Government revenue and strained fiscal positions.

 

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