Non-Performing Loans (NPLs) in the nation’s banking industry have continued their downward trend in recent months, falling to N1.44trillion in the second quarter of this year from N1.67trillion in Q1, latest data released by the National Bureau of Statistics (NBS), shows.
According to the “Selected Banking Sector Data Q2 2019” report released by NBS over the weekend, gross loans granted by banks fell to N15.48trillion in Q2 ’19 from N15.54trillion in the first quarter.
According to New Telegraph, in terms of credit to private sector, the report shows that the oil & gas and manufacturing sectors got credit allocation of N3.33trillion and N2.32trillion respectively, to record the highest credit allocation as at the period under review.
The report further shows that specific provisions made by banks declined from N1.74trillion in Q1’19 to N1.57trillion in the second quarter of this year.
A breakdown of the report indicates that total NPLs in the agriculture sector dropped to N48.2billion in Q2’19 from N50.49billion in the same period of last year.
Similarly, total NPLs in the manufacturing sector fell to N111.04billion in Q2’19 from N136.07billion in the corresponding period of 2018.
Likewise, total NPLs in real estate sector plunged from N172.55billion in the Q2’18 to N76.10billion in the second quarter of this year.
In the same vein, total NPLs in oil and gas sector dropped from N770.52billion in second quarter of last year to N577.49billion in second quarter of this year.
According to Central Bank of Nigeria (CBN) figures, the total non-performing loans of deposit money banks (DMBs) declined to N1.79 trillion in 2018 from N2.36 trillion in the previous year.
The apex bank had noted that “the downward trend is a good indicator of the effectiveness of the recovery efforts of the banks and the regulatory support of the CBN towards achieving lower NPLs, even though the ratio remains above the prudential requirement of five per cent.”
It would be recalled that in its 2018 annual report released last month, the Nigerian Deposit Insurance Corporation (NDIC) had stated that “total credit extended by the DMBs to domestic economy amounted to N15.29 trillion in 2018, representing a 3.90 per cent decrease from the N15.91 trillion recorded in 2017.
“Similarly, the industry non-performing loans decreased by 25.15 per cent to N1.79 trillion in 2018 from N2.36 trillion in 2017.
“The banking industry was exposed to high credit risk as depicted by the high NPLs ratio of 11.70 per cent as at December 31, 2018, though an improvement when compared with NPLs ratio of 14.84 per cent recorded as at December 31, 2017.
The industry NPLs ratio of 11.70 per cent exceeded the maximum prudential threshold of five per cent for DMBs. In the same vein, the NPLs to shareholders’ fund ratio improved from 69.21 per cent in 2017 to 57.50 per cent in 2018.”