Banking Sector’s Non-Performing Loan Ratio Drops To 4.8%, Lowest In 10 Years–CBN
The ratio of Non-Performing Loan in the banking industry dropped to 4.8 per cent in the month of December last year, the Governor of the Central Bank of Nigeria, Mr Godwin Emefiele has said.
Emefiele said this on Tuesday while responding to questions from journalists shortly after the two-day meeting of the Monetary Policy Committee held at the CBN headquarters in Abuja.
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The apex bank boss said that contrary to claims in some quarters that the NPLs are beginning to assume an upward trend, banking industry’s statistics before the CBN showed otherwise.
The CBN’s approved regulatory limit for Non-Performing Loan ratio for Nigerian banks is five per cent.
As of November 23rd, 2021 when the CBN held the last MPC meeting. NPL was 5.3 per cent for the month of October 2021.
“The MPC noted that the Non-Performing Loan ratio at 5.3 percent in October 2021, reflected progressive improvement, compared with 5.7 percent in October 2020. The Committee, however, urged the Bank to sustain its tight prudential regime to bring the NPL ratio below the five percent prudential benchmark.”
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But speaking at the end of Tuesday’s meeting, Emefiele said that the NPL portfolio has been trending downwards in recent times dropping to 4.8 per cent which is the lowest rate in the last ten years.
Statistics from the CBN showed that private sector credit rose to a record high of N35.31trn as of November 2021, representing N5.16trn net new loans between January and November 2021.
Bank credit to private sector in Nigeria increased by 17 per cent compared to N30.2trn recorded as of December 2020.
Bank credit in Nigeria has skyrocketed in recent times, owing to a chain of CBN policies and increased activities in the Nigerian lending space, especially with fintechs.
Despite the increase in the amount of bank credit to the economy, lending rates still remain on the high, with the maximum lending rate as of November 2021 rising to 27.26 per cent compared to 27.1 per cent recorded in the previous month.
