Banking industry still exposed to high credit risk – NDIC

The Nigerian Deposit Insurance Corporation (NDIC) has disclosed that the banking industry remains exposed to high credit risk as depicted by the high Non Performing Loans (NPLs) ratio of 11.70% as at 31st December, 2018.

This, the Corporation said, exceeded the maximum prudential threshold of 5%.

But the disclosure which was contained in the 2018 annual report of the corporation hosted in its website yesterday also indicates that it is still an improvement when compared with NPLs ratio of 14.84% recorded as at 31st December, 2017.

The report further highlighted that the banking industry NPLs decreased by 25.15% to 1.79 trillion in 2018 from 2.36trn in 2017.

In the same vein, the NPLs to Shareholders’ Fund Ratio improved from 69.21% in 2017 to 57.50% in 2018.

The banking industry average Capital Adequacy Ratio (CAR) increased to 15.26% as at 31st December, 2018 from 10.23% as at 31st December, 2017, above the regulatory minimum of 10% and 15% for banks with national and international authorisation, respectively.

The increase in the CAR could be explained by the 44.88% increase in the total qualifying capital from 2,201.58 billion in 2017 to 3,189.55 billion in 2018 and complemented by the 2.89% decline in the Total RiskWeighted Assets from 21,520.82 billion in 2017 to 20,898.71 billion in 2018.

The recapitalisation requirements declined from 1.57 trillion in 2017 to 704.88 billion as at 31st December, 2018.