Total banking sector NPLS declined to 6% in Q4 2020 reflecting CBN’s efforts for loan book restructuring

Charles Abuede

Despite the impact of the coronavirus pandemic which made some Nigerian businesses grapple for funds and support from the government as well as some banks due to their inability to restructure their books, the total banking sector non-performing loans have marginally declined to 6.0 per cent to N20.5 trillion in the final quarter of 2020 compared to 6.1 per cent in the corresponding period of 2019. This reflects the impact of CBN’s regulatory forbearance which has allowed banks to restructure their loan books. The Q4 banking sector data from the national bureau of statistics (NBS) revealed. Major highlights from the report showed that banking credit expanded by 2.5 per cent quarter on quarter to N20.3 trillion in Q4-2020.

According to the data set, there was a 23.31 per cent year on year decline in the total loan disbursed to the agriculture sector to N29.53 billion with mining and quarrying sector recording a massive fall in the total loans by 99.98 per cent as there was no amount disbursed to the sector during the year 2020. Also, manufacturing saw its total sourced funds decline steeply by 3.33 per cent to N99.65 billion in 2020. However, increases were witnessed in the finance and insurance industry as well as the constructions industry due to the phenomena 14.9 per cent and 97.4 per cent increases to N5.26 billion and N170.59 billion in 2020 from the 2019 corresponding figures.

Elsewhere, the official statistics bureau also reported that during the period under review, a volume of transaction amounting to 3.5 billion in the total value of N356.5 trillion on electronic payment channels in the Nigeria Banking Sector. Thus, the total transactions carried out in the final three months of 2020 was dominated by online transfers with a total volume at 2.23 billion and valued at N120.27 trillion. Similarly, there was a 10.86 per cent quarter on quarter increase to N9.92 trillion in the total payments carried out using mobile app transfers while USSD banking statistic recorded 22.6 per cent surge to N1.63 trillion by the end of the quarter as a result of the need to practice social distancing and maintain health safety resulting from the closure of brick and mortar branches of banks as measures to contain the rising cases of the covid-19 pandemic during the period under review.

Also, total transactions carried using point of sales (Pos) terminals stood at N1.52 trillion with a total volume of 214.85 million while transactions at the automated teller machines (ATM) points declined by 10.1 per cent quarter on quarter to N4.55 trillion and total transaction volume fell 14.1 per cent to 455.3 million and total transactions by cheques climbed to N4.22 trillion by 10.3 per cent with a total volume recorded at 5.5 million in the period under review.

In terms of credit to the private sector from the banking sector during the final three months of 2020, the total value of credit allocated by the bank grew by 2.55 per cent quarter on quarter to reach N20.37 trillion with the Oil & Gas and Manufacturing sectors being the highest recipients as the total credit allocation to the sectors stood at N3.93 trillion and N3.19 trillion respectively.