Q3’19: Banks’ NPLs moderate by N1.14trn
- As gross loans hit N16.62trn
By Omobayo Azeez
The profile of non-performing loans in the Nigerian banking sector has declined from N2.24 trillion in Q3 2018 to N1.1 trillion at the end of Q3 this year.
This represents a decline of N1.14 trillion or 50.89 per cent, even as gross loan offers by banks in the system jacked up to N16.62 trillion as at September, growing by 4.79 per cent from N15.86 trillion in the comparative period of 2018.
This is disclosed by the National Bureau of Statistics (NBS) in its Selected Banking Sector Data – 2019 released on Tuesday.
A non-performing loan (NPL), also known as bad loan, is a sum of borrowed money upon which the debtor has not made the scheduled payments for a specified period.
Although the exact elements of nonperformance status vary, depending on the specific loan’s terms, no payment is usually defined as zero payments of either principal or interest.
According to the report, the bad loan portfolio in banks dropped from N2.24 trillion in the third quarter of 2018 to N1.79 trillion in the fourth quarter of 2018.
The decline continued as NPLs plunged further from N1.79 trillion in the fourth quarter of 2018 to N1.67 trillion, N1.44 trillion and N1.1 trillion in the first, second and third quarters of this year respectively, the report said.
On the year-on-year sectoral change on NPL, the report revealed that the oil and gas sector recorded the highest decline of N738.15 billion in NPLs.
The sector’s NPL dropped from N1 trillion in the third quarter of 2018 to N264.2 billion as of the quarter under review.
The power and energy sector trailed by recording N116.01 billion decline in NPL from N163.89 billion at Q3’18 to N46.88 at Q3,19.
Similarly, real estate sector recorded a decline of N74.02 billion in NPL from N130.58 billion to N56.56 billion, manufacturing N43.67 billion from N144.31 billion to N100.64 billion, while general commerce recorded decline of N38.22 billion from N186.33 billion to N148.11 billion.
In the same vein, transportation and storage recorded a decline of N32.27 billion from N92.8 billion to N60.54 billion; finance and insurance N35.42 billion from N40.36 billion to N5.94 billion, while general, information and communication, and professional and technical activities recorded NPL drops of N26.42 billion, N39.4 billion and N5.19 billion in that order.
Construction sector recorded a decline of N9.25 billion in NPL; administrative and support services dropped by N620 million; human health moderated by N1 billion; NPL is arts and entertainment fell by N2.36 billion, and public utilities bad loans shed N450 million.
On the flip side, while 16 sectors recorded decline in NPL portfolio, four others recorded slight increase.
This group is led by agriculture which rose by N1.63 billion or 3.36 per cent from N48.33 billion to N49.96 billion.
Government which recorded the highest percentage increase of 131.94 per cent added N730 million to its NPL profile from N550 million in Q3’2018 to N1.28 billion in Q3’19.
Water supply surged by N610 million or 37.67 per cent from N1.63 billion to N2.24 billion, while education recorded increase of N4.22 billion or 94.65 per cent from N4.46 billion to N8.69bn.
The recorded fall in NPLs in the period under review despite growth in gross loans at the same time is an indication that banks in Nigeria are applying measures to bring bad loans to barest minimum.
Recall that in August this year, the Central Bank of Nigeria (CBN) set new limits for banks and other financial institutions on non-performing loans to reflect in their books.
The bank disclosed this in its exposure draft on prudential guidelines to microfinance banks, Deposit Money Banks, Mortgage refinance companies, finance companies, and Development Finance Companies.
The financial institutions have also secured the approval of the CBN to enable them recover loans from recalcitrant creditors from their other accounts domiciling with other banks aside the one being owed.