Banks reducing non-performing loans to meet CBN’s threshold

total of nine banks listed on the Nigerian Stock Exchange are reducing the size of their non-performing loans in an attempt to meet the five per cent threshold prescribed by the Central Bank of Nigeria.

The CBN in August had set new limits for banks and other financial institutions on the NPL to reflect in their books.

The apex bank’s regulation is contained in the Prudential Guidelines to Microfinance Banks, Deposit Money Banks, Mortgage Refinance Companies, Finance Companies, and Development Finance Companies,

“The NPL limit banks are required to manage their credit risk effectively. To this end, all banks are to ensure that the level of the NPLs in relation to gross loans does not exceed five per cent,” the apex bank said.

Two of the nine banks, Ecobank and FBN Holdings, reported a reduction in their NPLs to 14.5 per cent, according to their half year ended June 30, 2019 results and accounts submitted to the NSE.

Group Managing Director of FBN Holdings, Urum Eke, had said on the NPL, “Despite the difficult operating environment, we remain resolute in delivering on our guidance across key metrics including our commitment towards a single digit NPL ratio by the end of the year, as evidenced by the reduction in the NPLs from the last quarter.

“Essentially, Atlantic Energy – our largest NPL – was written off, translating into a decline in the NPL ratio from 25.9 per cent in December 2018 to 14.5 per cent as of June 2019, a step that brings us closer to our 2019 target

Babatunde

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