Firms, Individuals Owe Banks N15.480 Trillion

• Firms, Individuals Owe Banks N15.480 Trillion

The high debts in the banking sector are not just owed by businesses but also individuals, according to the recent data from the National Bureau of Statistics (NBS).

According to the report, 2.2 million debtors that took at least N1 million from banks owed a total of N122 billion.

While 87,485 debtors that borrowed between N1 million and N10 million, owe banks around N286.98 billion. But the 17,883 debtors that procured between N10 million and N50 million loan from various banks owe a cumulative sum of N382.6 billion.

Another 4,441 debtors owed between N100 million and N500 million, according to the statistics.

A critical look into the numbers revealed that at least 1,205 debtors that borrowed between N500 million and N1 billion are currently owing a total sum of N744.72 billion.

Around 3,891 firms and other debtors who took over N1 billion loans, owed various banks N13.19 trillion.

The NBS put the total loans in the banking system at N15.35 trillion as of March 2019. However, only 3,891 firms and individuals owe 85.9 percent of the total amount.

The non-performing loans in the banking sector stood at N1.676 trillion as of March 2019, while the ratio of the non-performing loans to total loans in the sector was 10.83 percent.

Rising debts in the banking sector remained one of the key issues impeding investors sentiment in the sector, especially after the new central bank policy that mandated a loan-to-deposit ratio of 60 percent.

Analysts expect the new policy to further increase the percentage of non-performing loans to total loans in the banking sector given the current economic headwinds.

Mr Ahmed Kuru, the Managing Director/Chief Executive Officer, Asset Management Corporation of Nigeria (AMCON), who approached the Federal High Court in Abuja on September 2018 to seek assistance with over N5.4 trillion debt owed the organisation, said: even banks owe more debts than other businesses in the country and have refused to pay despite government bailing them out during global financial crisis.

He said: “My Lords, it is clear to us now that we (AMCON) cannot go very far without the support of the courts because AMCON obligors deliberately raise technicalities in courts to elongate and delay their cases with AMCON.”

“It has become clear to us that in order to attain the target as we approach sunset, we must redouble our efforts in the areas of enforcement. The AMCON Act anticipated a situation where we may need to enforce if negotiations fail. Negotiation has failed us, given our sunset date. It is also clear to us that we cannot go very far without the strong support of the judiciary. Out of the 191,766 cases pending at the federal high court, more than 3,000 are related to AMCON alone,” Kuru added.