Banks Cut Non-Performing Loans to N1.2 Trillion in the First Quarter 2020

The total non-performing loans in the banking sector moderated to N1.2 trillion in the first quarter of the year, according to the Central Bank of Nigeria.

This represents around 6.4 percent of the total credit of N18.9 trillion that banks provide businesses in the economy as of March 2020.

The central bank disclosed this in its latest statistics report released on Monday.

The apex bank attributed the decline in non-performing loans to the surge in recoveries, write-offs and disposals by financial institutions.

This was affirmed by the Monetary Policy Committee last week when the Central Bank Governor, Mr. Godwin Emefiele, stated that non-performing loan in the banking sector has declined.

Mr. Emefiele said, “The committee noted the decrease in NPLs ratio to 6.4 per cent at end-June 2020 from 9.4 per cent in the corresponding period of 2019, on account of increased recoveries, write-offs and disposals.

“The committee expressed confidence in the stability of the banking system and urged the bank to monitor the compliance of Deposit Money Banks to its prudential and regulatory measures to sustain the soundness and safety of the banking industry.”

The governor disclosed that total domestic credit expanded by 7.47 percent and 5.16 percent in May and June respectively.

Emefiele added that the Monetary Policy Committee lauded the central bank’s Loan-to-Deposit Ratio initiative, saying they believe it will address the current credit challenges facing the nation.

He explained that credit to the economy rose by 3.33 trillion from N15.56 trillion in May 2019 to N18.90 trillion at the end of June 2020.

“These credits were largely recorded in manufacturing, consumer credit, general commerce, and information and communication and agriculture, which are productive sectors of the economy,” he said.