CBN data reveals that the value of Nigeria's non-performing loans dropped to $2.9bn in February

RECENTLY-published Central Bank of Nigeria (CBN) statistics have revealed that the total value of non-performing loans totalled N1.21tn ($2.91bn) as of the end of February 2022 in what officials say is an indication that the sector is being well policed.

According to date just released by the CBN's Monetary Policy Committee (MPC), the total credit in the sector rose to N25.25tn as of the end of February 2022 from N21.13tn as of the end of February 2021. It stated that the non-performing loans reflected the case-by-case review of regulatory forbearance, the effects of the global standing instruction policy and sound industry risk management practices.

Kingsley Obiora, a member of the MPC, said:  “Overall, the industry credit increased by 19.53% to N25.25n in February 2022 from N21.13tn in February 2021. The industry non-performing loan ratio continued to trend below the prudential threshold of 5%.

“It decreased to 4.80% at the end of February 2022 compared with 6.38% in February 2021. The downward trend was attributable to recoveries, restructuring of facilities and sound management practices by deposit money banks."

Aishah Ahmad , the CBN's deputy governor, financial systems stability directorate, added: “Total credit also increased by N4.13tn between end February 2021 and end-February 2022 with significant growth in credit to manufacturing, general commerce and oil and gas sectors.” She stressed that the non-performing loans ratio declined further to 4.8% in February 2022, from 4.94% in December 2021.

Robert Asogwa, another MPC member, said, the financial sector remained strong similar to the position at the last meeting, especially looking at the banking and capital market developments. He added that the banking sector appeared sound and resilient with a considerably high capital adequacy ratio and liquidity ratio in February 2022, in line with prudential requirements.

With a persistently lowering non-performing loan ratio since 2021 despite the shocks caused by the Covid-19 pandemic, Mr Asogwa  said the asset quality of the banking system was now one of the strongest in sub-Saharan Africa.

He added: “Bank intermediation continued to improve in February 2022 with industry total credit increasing from N24.6tn in January 2022 to N25.25tn in February 2022. The extension of the moratoria on bank loans up to the middle of 2022 as part of the Covid-19 relief measures continues to alleviate the burden on the borrowers impacted severely by the pandemic.”