Banking Sector’s Non-Performing Loan Ratio Drops To 4.84% Says Central Bank

The Central Bank of Nigeria’s Monetary Policy Committee has said the non-performing loan portfolio of banks has improved and it is now below regulatory limit.

This is contained in the MPC communique released by the apex bank.

The NPL is a measure of accessing the stability of the banking system.
The regulatory limit is five per cent.

The CBN said, “The MPC also noted the continued resilience of the banking system, evidenced by the further moderation of the ratio of Non-Performing Loans (NPLs) to 4.84 per cent in February 2022 from 4.90 per cent in December 2021.

“The Committee also noted that Liquidity Ratio (LR) remained above its prudential limit at 43.5 per cent in February 2022, while the Capital Adequacy Ratio (CAR), moderated slightly to 14.4 per cent in February 2022 from 14.5 per cent in December 2021.”

Commercial banks in Nigeria saw their NPLs jumped to 6.3 per cent in the month of February 2020.

This was linked to inability of the private sector operators to service their loans when the Covid-19 pandemic led to a global economic meltdown.

The CBN had introduced regulatory forbearance including the reduction of intervention loans from nine per cent to five per cent as well as restructuring loans to ensure ease in debt repayment and servicing by private sector and households.

In October last year, the apex bank said NPLs fell to 5.3 per cent which was a little above the five per cent regulatory limit.

“Overall, members expressed confidence in the Bank’s regulatory regime and commitment to maintaining stability in the banking system, urging the Management to sustain its tight regulatory surveillance,” the communique added.