CBN Receives Requests From 17 Banks To Restructure 32,000 Loans

– Manufacturing Sector Tops Request For Restructured Loans

The Central Bank of Nigeria said it had received requests from 17 Deposit Money Banks to restructure about 32,000 loans taking by individuals and businesses.

The apex bank said that the DMBs plan to restructure over one-third of in their loans, owing to repayment problems associated with the effects of the coronavirus pandemic.

The Deputy Governor, Financial Systems Stability, CBN, Aisha Ahmad disclosed this in her personal statement delivered at the last Monetary Policy Committee meeting.

In her personal statement which was released on Thursday, she said the requests to restructure over 32,000 loans for businesses and individuals, represent 33 per cent of the loans portfolios of banks.

According to her, the majority of the loans to be restructured were within the manufacturing and general commerce sectors.

Sh said, “Non-performing loans ratio stood at 6.6 per cent at end April 2020, compared with 11 per cent at end April 2019, while other prudential ratios
remain robust.

“This resilience notwithstanding, the industry remains exposed to shocks from spillover effects of the pandemic on macroeconomic conditions.

“This underscores the importance of regulatory measures to mitigate the effects of the crisis, such as granting forbearance to banks to temporarily restructure loans
for businesses and households most affected by Covid-19 and the Global
Standing Instruction policy to limit NPLs.

“As at end-May 2020, staff reports indicate that 17 banks submitted requests to
restructure over 32,000 loans for individuals and businesses impacted by
the pandemic, representing 32.94 per cent of total industry loan portfolio, with
the manufacturing and general commerce sectors constituting the bulk of the
restructured facilities.”

She said results from ongoing impact assessment of Covid-19 effects on impairment by banks, indicate modest impact given regulatory policy measures already implemented.

According to her, these measures coupled with close monitoring by authorities and enhanced risk management practices by financial institutions, would help to
mitigate the emerging risks and preserve financial system stability.

Ahmad said even as the CBN monitors the potential risks to financial stability, it is gratifying that financial soundness indicators have remained strong, despite the headwinds and rapid expansion of credit.

She said gross credit increased by N3trn between May 31,2019 and April 30 this year, noting that this was driven by the Loan to Deposit Ratio policy being implemented by the CBN.

She said out of the N100bn Covid-19 health sector intervention fund, about N10.15bn had been disbursed.

In addition, Ahmad said N93.2bn under
the N1tn Real Sector Support Fund had been released to boost local manufacturing, whilst over
14,331 beneficiaries have received N10.9bn out of the N50bn Targeted
Credit Facility for households and SMEs.

According to her, these measures, coupled with prior monetary and fiscal reforms, have kept the domestic economy resilient, blunting the effects of the coronavirus on economic activity.