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Banks’ Bad Loans Rise by 50% to N2.4tn

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  • Banks’ Bad Loans Rise by 50% to N2.4tn

The economic challenges in the country made the level of non-performing loans in the Deposit Money Banks to rise by 50 per cent from N1.639tn in December 2016 to N2.424tn by September this year, according to the Nigeria Deposit Insurance Corporation data.

The CBN’s non-performing loans ratio in the banking industry is five per cent, but the banks’ NPLs have moved from 10.13 per cent to 15.18 per cent within the period, the financial returns of the DMBs compiled by the NDIC revealed.

According to the NDIC data, the NPLs grew from N1.639tn in December 2016 to N1.921tn in March 2017, declining to N1.880tn in June but rising to N2.424tn in September this year.

The data, however, showed that total loans and advances by the banks decreased within the period before rising again.

Total loans and advanced decreased from N16.183tn in December 2016 to N16.076tn in March 2017 and N15.783tn in June, before rising to N15.976tn in September.

The Director, Banking Examination Department, NDIC, Mr. Adedapo Adeleke, disclosed the figures in a presentation entitled: ‘Curtailing the growth of non-performing loans in banks – The role of regulators and supervisors.’’

The table of the NPLs was obtained by our correspondent on Monday.

Adeleke said, “The table showed that while the NPL ratios and the volume of non-performing loans continued to grow up till September 2017, the total loans advanced by the industry continued to decrease in volume as banks curtailed lending and concentrated on loan recovery drives.

“Those developments were worrisome for an industry that has battled headwinds through the years and suffered colossal losses due to bad loans. The NPL to total loan ratio in the banking industry has risen significantly since 2015 and has gone well beyond the maximum regulatory limit of five per cent.

“The rise has been largely attributed to the fall in crude oil price and production levels arising from the militancy in the Niger Delta.”

According to the NDIC director, the risk assets examination of 20 banks as of December 31, 2016, revealed that of the total industry loan portfolio of N15.597tn, the sum of N3.105tn (or 19.91 per cent) was non-performing.

He said the 19.91 per cent NPL ratio was 79.04 per cent increase over the average industry ratio of 11.12 per cent recorded as of December 31, 2015.

Adeleke said, “The Financial Stability Report for 2017, issued by the CBN, indicated that the ratio of NPLs net of provision to capital for the banking industry increased to 38.4 per cent in 2016 from 28.4 per cent as of December 31, 2015.

“Also the Financial Stability Report issued by the CBN as of December 31, 2016 indicated a disproportionate credit allocation to the oil and gas sub-sector by the Nigerian banks.

“Sectoral allocation to oil and gas as of December 31, 2016 was 29.59 per cent. Manufacturing, general commerce and government were 13.41 per cent, 8.71 per cent and 8.34 per cent, respectively. Others comprising of telecoms, power, real estates and services, among others, accounting for 39.95 per cent.”

He traced the causes of the rising NPLs in the banking sector to banks’ lending policies, which he said had been relatively unselective and competition-driven, with little consideration for associated risks.

Others are inadequate appraisal of loans and poor assessment of obligors and sectors in which they operate, leading to loan concentration and lowering of under-writing standards; rapid credit growth associated with lower credit standards; and poor GDP growth rate, which became negative in the first quarter 2016 and resulted in recession by the second quarter of the year.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

Ecobank To Pay Customers N5 For Every Dollar Received

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Ecobank To Pay Customers N5 For Every Dollar Received

Ecobank has implemented the CBN scheme which offers N5 for every Dollar received into domiciliary accounts or as cash over the counter. Korede Demola-Adeniyi; Head, of Consumer Banking, Ecobank Nigeria, who announced this in Lagos stated that the decision is in line with the CBN directive and fully aligns with efforts to encourage the inflow of diaspora remittances into the country.

She noted that the “CBN Naira 4 dollar scheme” is an unprecedented incentive for senders and recipients of international money transfers.

Korede Demola-Adeniyi said that the scheme takes effect from 8th March and will run till 8th May 2021. “Ecobank will pay N5 on every Dollar so beneficiaries will not only get the foreign currency sent from their family and friends abroad, but they will also get extra Naira”, she stated.

Only recently, Ecobank had a first-of-its-kind virtual Diaspora Summit to discuss opportunities for Nigerians living abroad and the various platforms available to assist them with their investment decisions and remittance needs. The event had major players in the remittance space, diaspora audience, government officials and notable stakeholders in attendance.

Further, the Managing Director, Ecobank Nigeria, Patrick Akinwuntan has disclosed that apart from consistent engagement with Nigerians in the diaspora, Ecobank is leveraging its digital technology to make remittances to Nigeria and Africa easy, convenient and affordable.

Mr. Akinwuntan stated that growing evidence has shown a positive relationship between diaspora remittances and economic growth.

“Ecobank will continue to pursue its mandate of helping to enhance the economic development and integration of Africa, through the 33 countries where the bank operates on the continent. Ecobank’s Rapidtransfer and mobile app (Ecobank Mobile) enable Africans, wherever they are, to easily and instantly send money to bank accounts, mobile wallets and agent locations across 33 African countries”, he stated.

Ecobank Nigeria, a member of the Pan African Banking Group is committed to supporting Africans in the diaspora by providing advisory services, remittance solutions, investment options and financial planning schemes. The bank also offers mortgages, treasury bills, capital market instruments, among others.

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Banking Sector

Peter Obaseki Retires as Chief Operating Officer of FCMB Group Plc

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The Board of Directors of FCMB Group Plc has announced the retirement of Mr. Peter Obaseki, the Chief Operating Officer of the financial institution, with effect from March 1, 2021. He was also an Executive Director of the Group.

His retirement was approved at a meeting of the Board of the Group on February 26, 2021. This has also been announced in a statement to the Nigerian Stock Exchange (NSE) by the financial institution.

The Chairman of FCMB Group Plc’s Board of Directors, Mr Oladipupo Jadesimi, thanked Mr. Obaseki for his valuable service and excellent support to the Board for many years.

FCMB Group Plc is a holding company divided along three business Groups; Commercial and Retail Banking (First City Monument Bank Limited, Credit Direct Limited, FCMB (UK) Limited and FCMB Microfinance Bank Limited); Investment Banking (FCMB Capital Markets Limited and CSL Stockbrokers Limited); as well as Asset & Wealth Management (FCMB Pensions Limited, FCMB Asset Management Limited and FCMB Trustees Limited).

The Group and its subsidiaries are leaders in their respective segments with strong fundamentals.

For more information about FCMB Group Plc, please visit www.fcmbgroup.com.

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Banking Sector

COVID-19: CBN Extends Loan Repayment by Another One Year

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Central Bank Extends One-Year Moratorium by 12 Months

The Central Bank of Nigeria (CBN) has extended the repayment of its discounted interest rate on intervention facility by another one-year following the expiration of the first 12 months moratorium approved on March 1, 2020.

The apex bank stated in a circular titled ‘Re: Regulatory forbearance for the restructuring of credit facilities of other financial institutions impacted by COVID-19’ and released on Wednesday to all financial institutions.

In the circular signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, CBN, the apex bank said the role-over of the moratorium on the facilities would be considered on a case by case basis.

The circular read, “The Central Bank of Nigeria reduced the interest rates on the CBN intervention facilities from nine per cent to five per cent per annum for one year effective March 1, 2020, as part of measures to mitigate the negative impact of COVID-19 pandemic on the Nigerian economy.

“Credit facilities, availed through participating banks and OFIs, were also granted a one-year moratorium on all principal payments with effect from March 1, 2020.

“Following the expiration of the above timelines, the CBN hereby approves as follows:

“The extension by another 12 months to February 28, 2022 of the discounted interest rate for the CBN intervention facilities.

“The role-over of the moratorium on the above facilities shall be considered on a case by case basis.”

It would be recalled that the apex bank reduced the interest rate on its intervention facility from nine percent to five percent and approved a 12-month moratorium in March 2020 to ease the negative impact of COVID-19 on businesses.

To further deepen economic recovery and stimulate growth, the apex bank has extended the one year-moratorium until February 28, 2022.

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