Customers of GTB, Zenith, Access, Others Default on Repayment of N1.5trn Loan

• According to data by the CBN, non-performing loan of Nigerian banks has hit N1.5 trillion
• N1.5 trillion worth of non-performing loans were reported in the banking industry by June
• The amount made up 4.1% of the total N37.81 trillion in credit as of the end of June 2023

To reduce the amount of non-performing loans in their financial accounts, banks across the country have reportedly proceeded to write off the debts and debit accounts of obstinate borrowers in other banks.

Data released by the Central Bank of Nigeria (CBN) has shown that there were N1.5 trillion worth of non-performing loans in the banking industry out of a total of N37.81 trillion in credit as of the end of June 2023.

According to Investopedia, a non-performing loan (NPL) is a loan that is in default due to the fact that the borrower has not made the scheduled payments for a specified period.

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The report states that this made up 4.1% of the loans during the period under examination.

NPL remains below the maximum prudential requirement

A report released by the CBN on personal comments of members of the MPC noted that the non-performing loans ratio remained below the maximum prudential requirement of 5.0%.

It declined from 5.0% in June 2022 to 4.1% in 2023.

The continuous decline in NPL was attributable to write-offs, restructuring of facilities, Global Standing Instruction, and sound credit risk management.

To monitor persistent loan defaulters and reduce non-performing loans in the banking sector, among other things, the CBN announced the GSI guidelines in 2020.

The CBN said the GSI gave banks the right to take any account that the debtor maintained across all financial institutions in Nigeria and deduct the unpaid principal and interest upon default.

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The reports on the banks stated that the capital adequacy ratio (CAR) and liquidity ratio (LR) had continued to be above the required minimum levels.

CAR stayed over the 10.0% prudential minimum even though it dropped from 14.1% in 2023 to 11.2%.

The LR, it was said, was also more than the legal minimum ratio of 30%. Nevertheless, it rose from 42.6% in June 2022 to 48.4% in June 2023.

Data indicated that in June 2023, the banking sector's total assets and gross credit were on the rise.

According to the report, the total industrial assets increased between the end of June 2022 and the end of June 2023 N30.92 trillion, or 47.21% to N96.4 trillion.

Total credit to the economy is on the rise, and as of June 2023, it was N37.81 trillion, up N10.75 trillion or 39.73% from the end of June 2022 to the end of June 2023.

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The CBN claimed credit growth has persisted since 2019 as a result of the CBN's Loan-to-Deposit Ratio policy.

A report earlier found close to N1 billion was lost to fraud and forgeries through various payment channels and instruments of transactions in the first quarter of 2023.

Access, GTBank, UBA, Zenith, others to shut branches nationwide for 24 hours, advise customers

Legit.ng earlier reported that branches of all commercial banks, including other financial institutions, would be closed across the country on Monday, October 2, 2023.

This followed the federal government's declaration of a public holiday to commemorate Nigeria's 63rd Independence Day anniversary.

Source: Legit.ng