Nine banks’ non-performing loans rise to N814 billion – reports

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According to the findings of The punch.

The nine banks are Access Holdings Plc, Zenith Bank Plc, Wema Bank Plc, FCMB Group, Union Bank of Nigeria Plc and Stanbic IBTC Holdings Plc.

The others are Guaranty Trust Holding Plc, United Bank for Africa Plc and Ecobank Nigeria.

However, with the banking sector’s NPL ratio ending 2021 at 4.85%, some of the nine banks remained within the limits of the 5% NPL ratio stipulated by the Central Bank of Nigeria.

Other findings also show that while some banks experienced an increase in their NPLs during the period under review, a number of them experienced a significant decline in their NPLs.

From the banks’ audited financial statements for 2021, the findings showed that Access Holdings, Zenith Bank and GTCO reported the three highest NPLs by value among the nine banks, while Stanbic IBTC Holdings reported the lowest. .

Access Bank in 2021 reported NPL181.5 billion in value, an increase of 4.3% from the N161.2 billion it recorded in 2020, while Zenith Bank’s NPLs reported reached N146.8 billion in 2021 from N125.2 billion recorded in 2020, an increase of 17.3 percent.

Zenith Bank, in a presentation to investors/analysts, explained that it has adopted a comprehensive and integrated approach to risk management that has been conducted from the level of the board of directors to the operational activities of the bank.

The bank further explained that its risk management was practiced as a collective responsibility coordinated by risk control units and was properly separated from market-facing units to ensure independence.

“There is regular scanning of the environment to detect threats and opportunities to improve industry knowledge and information that guides decision-making. The group maintains a proactive approach to business and ensures an appropriate balance between its risk and reward objectives,” the bank explained.

Wema Bank in 2021 reported NPL 21.3 billion, an increase of 19.3% from NPL 19.3 billion in 2020, while FCMB Group NPL increased to NPL 45.93 billion N, an increase of 61% from N28.57 billion in 2020.

The others are Union Bank of Nigeria with NPL 38.66 billion in 2021 from NPL 29.45 billion in 2020, while Stanbic IBTC Holdings reported a 23.4% decline in its NPL to NPL 20.3 billion in 2021 compared to N25.5 billion in 2020.

Additionally, GTCO’s NPL value increased by 2.3% to N113.94 billion in 2021 from N111.43 billion reported in 2020, while UBA closed 2021 with an NPL value of N96. N.5 billion against N120.08 billion reported in 2020, indicating a significant reduction in its NPLs.

Additionally, ETI Nigeria reported NPL of N149.15 billion in value in 2021 from N167.41 billion in 2020, a decline of 11%.

Ecobank Nigeria reported an NPL ratio of 16.6% in 2021 compared to 19.6% in 2020. Access Holdings closed 2021 with an NPL ratio of 4.3% compared to 4% in 2020, as Zenith Bank’s NPL ratio fell to 4.2% in 2021 from 4.3% in 2020.

Analysts said NPL ratios in the banking sector remained stable in 2021, following the CBN’s refrain from restructuring lending exposure to critical sectors.

An excerpt from Banks Performance revealed that GTCO reported a decline in its NPL to 6.04% in 2021 from 6.39% in 2020, while ETI Nigeria reported an NPL ratio of 16.30 in 2021 from 19.90% in 2020.

GTCO, in a presentation to investors/analysts, explained: “The Group improved the quality of its assets with IFRS 9 Stage 3 loans closing at 6.04% in 2021 compared to 6.39% in 2020.

“The marginal increase in prudential NPLs from 6.86% to 6.92% was the result of stress noted with certain exposures within the hospitality industry, individuals, clubs, cooperative societies and trade unions, as debtors of these sectors have been severely affected by Covid -19.

“The downstream sector benefited from the write-off of N7.2 billion in FY 2021, with its NPLs dropping from 11% in 2020 to 8.6% in 2021.

“IFRS 9 Stage 3 loans closed at N113.9 billion from FY 2021, up 2.2% from N111.5 billion in 2020. Stage 3 / Lifetime Credit Impaired Exposures closed at N57.5 billion, representing 50.5% coverage of loans in this classification.

“In aggregate terms (including regulatory risk reserves of N87.6 billion), the group has an adequate coverage of 150.4% for its Phase 3 names/NPLs, this position is in line with the plan of the group aiming to maintain 100% coverage for its NPLs. ”

UBA, Access Bank and Zenith Bank, among other banks, reported an NPL ratio below 5% in fiscal 2021.

For example, UBA’s NPL fell to 3.60% from 4.70% in 2020.

Speaking on its declining performance in NPL, UBA Group Chief Financial Officer Ugo Nwaghodoh said: “This is a testament to the quality of UBA’s loan portfolio, even as the bank remains relentless in its resolve to reduce the cost/revenue ratio, which stood at 63.0% at the end of the year.

Access Bank reported an NPL ratio of 4.00% in 2021 versus 4.30%, while Zenith Bank reported an NPL ratio of 4.20% in 2021 versus 4.30% in 2020.

Stanbic IBTC Holdings reported 2.10% NPL in 2021 versus 4.00% in 2020.

Stanbic IBTC chief executive Dr Demola Sogunle said in a statement that the NPL ratio moderated to 2.1%, well below the acceptable limit of 5% as total NPLs declined in value of 23%, coupled with responsible loan growth. in accordance with management’s prudent credit risk management practices.

In addition, Wema Bank reported that the NPL ratio decreased from 4.9% in 2020 to 4.5% in 2021, Union Bank of Nigeria’s NPL ratio decreased from 4.00% to 4, 30% in 2021.

The FCMB group closed 2021 with an NPL ratio of 4.10% compared to 3.3% in 2020.

Members of the CBN’s Monetary Policy Committee thus applauded management’s efforts to ensure the continuation of the downward trend in the bad debt ratio, which signifies an improvement in the conditions of the banking system.

MPC members also noted the continued resilience of the banking system, following the gradual improvement in the NPL ratio from 5.10% in November 2021 to 4.85% in December 2021 – a first for a long time.

In his personal statement, one member, CBN Deputy Governor Aishah Ahmad, said the NPLs had fallen to their lowest level in more than a decade despite increased lending from banks.

She noted that total credit increased by 4.09 billion naira between the end of December 2020 and December 2021, with significant growth in credit to the manufacturing, general trade and oil and gas sectors.

She said: “Key industry aggregates also continued their upward year-on-year trajectory with total assets rising to N59.24 billion in December 2021 from N50.99 billion in December. 2020, while total deposits increased to N38.42 billion from N32.21 billion during the period. same period.

“Total credit also increased by N4.09 billion between end-December 2020 and end-December 2021, with significant credit growth to the manufacturing, general trade, and oil and gas sectors.

“This impressive increase was achieved amid a continued decline in the non-performing loan ratio from 5.10% in November 2021 to 4.94% in December 2021, 6 basis points below the regulatory benchmark for the first time. over a decade.”

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