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Tuesday, March 21, 2023

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Banks’ Non-Performing Loans Top N1.6Tr in June 2016

Banks operating in Nigeria accumulated non-performing loans of over N1.6 trillion as at June 2016 according to latest figures from the Central Bank of Nigeria (CBN).

Professor Segun Ajibola, President, Chartered Institute of Bankers of Nigeria (CIBN) said in a write-up to Business Journal that the number of bad loans arising from the lackluster economic performance in the country continues to increase, leaving a telling effect on banks’ bottom lines.

“At the end of June, 2016, the Financial System Stability Report of the Central Bank of Nigeria noted that non-performing loans in that period grew by 158 per cent from N649.63 billion at end of December 2015 to N1.679 trillion at end of June 2016. The Apex Bank also observed that the industry ratio of non-performing loans net of provision to capital increased significantly to 30.9 per cent at end of June 2016 from 5.9 per cent at the end of December 2015, depicting weak capacity of the sector to withstand the adverse impact of non-performing loans. The much-desired financial inclusion expected to be championed by the banking industry continued to be hampered from poor infrastructural base and security challenges in the country.”

Ajibola urged the Federal Government to support the banking sector with incentives, such as waiving a percentage on tax for institutions in the financial services sector that deployed a minimum of 70 percent local content in their various activities.

“The government should also provide an enabling policy environment for commercial banks to take advantage of the vast opportunities in retail banking. There is also the need for both the government and the banking sector to go into public-private partnership agreements in the provision of infrastructural facilities and security that would encourage banks to set up retail banking facilities and cater to the unbanked and under-banked.”

The CIBN chief also canvassed the creation of a national innovation hub for financial technology to further enhance the operations of the Nigerian banking sector.

“This hub would go a long way not only in enhancing the banking sector but also providing a space where ideas and innovative concepts would flow freely.”

Business Journal
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