Deposit Money Banks to Restructure 33% of Loans
The Central Bank of Nigeria has said the deposit money banks will restructure over one-third of the nation’s loans following the rising number of defaulters, Aisha Ahmad, a member of the central bank monetary policy committee, stated.
In the Central Bank of Nigeria communique no. 130 of the Monetary Policy Committee meeting held on Thursday 28th May 2020 Ahmad said 17 banks have submitted requests to restructure over 32,000 loans or 33 percent of total loans for individuals and businesses.
Ahmad explained that the majority of these loans were within the manufacturing and general commerce sectors.
She said “As at end-May 2020, staff reports indicate that 17 banks submitted requests to restructure over 32 thousand 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.
“Results from ongoing impact assessment of Covid-19 effects on impairment by banks, indicate modest impact given regulatory policy measures already implemented. These, 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.”
She further explained that the nation’s financial system remains a bright spot of the economy and is well-positioned to support productivity and stimulate economic recovery.
She added that “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 (gross credit increased by N3.0 trllion between end-May 2019 and end-April 2020) driven by the Loan to Deposit Ratio (LDR) policy. Non-performing loans (NPLs) ratio stood at 6.6 per cent at end April 2020, compared with 11.0 per cent at end April 2019, while other prudential ratios remain robust.”
