Amid Tough Operating Environment, 10 Banks’ NPL Hits N811.7bn

Following persistent macro economic challenges, 10 leading banks in the country reported N811.7 billion Non-Performing Loans (NPL) by value out of the N21.87 trillion gross loans granted to customers and other financial institutions in 2022, THISDAY investigation has revealed.

The 10 banks in 2021 reported N724.45 billion NPL, about N18.36 trillion of their gross loans to customers and other financial institutions.

The banks are: Access Holdings

Plc, Zenith Bank Plc, Guaranty Trust Holding Company Plc (GTCO), and United Bank for Africa (UBA), all Tier-1 banks in Nigeria.

Others include: Fidelity Bank Plc, Wema Bank Plc, FCMB group Plc, Union Bank of Nigeria Plc, Stanbic IBTC Holdings Plc, and Sterling Bank Plc.

THISDAY checks revealed that sectors such as General Commerce, Oil & gas, and manufacturing contributed to the huge NPL in 2022, trigged by inflation rate, among other economic challenges over the years.

Nigeria was not immune to the impact of the Russia-Ukraine war as inflation especially food and energy prices spiked in the year under review. The Central Bank of Nigeria (CBN) raised interest rates multiple times to slow down accelerating inflation and this forced some banks to restructure their loans.

A breakdown revealed that Access Holdings in 2022 reported N176.9 billion NPL from N181.5 billion in 2021, while Zenith Bank declared N177.3 billion NPL in 20222 from N146.1 billion in 2021.

As GTCO reported a decline in its NPL to N102.37 billion in 2022 from N113.9 milllion in 2021, UBA saw its NPL increasing to N106.64 billion in 2022 from N102.04 billion in 2021.

In the year under review, Fidelity bank reported N64.6billion NPL as against N50.17 billion in corresponding year. FCMB group, however, closed 2022 with N45.01 billion NPL compared with N44.68 billion in 2021, while Union Bank declared N40.04 billion NPL in 2022 from N38.66 billion in 2021.

Others include: Wema Bank with N32.8 billion NPL in 2022 from N21.3 billion in 20221; Stanbic IBTC recorded N29.4 billion NPL in 2022 from N20.3 billion in 2021 and Sterling Bank closed 2022 with

N36.63 billion NPL as against N5.77 billion in reported in 2021.

Despite mixed performance in NPL by value, some Tier-1 banks NPL ratio was below the 5 per cent threshold of the CBN in 2022.

FCMB Group, and Wema Bank in the Tier-2 banks category reported NPL ratio above apex bank requirement.

The CBN had disclosed that average NPL ratio in the banking sector closed 2022 at 4.2 per cent from 4.9 per cent in 2021, attributable to write-offs, restructuring of facilities, Global Standing Instruction (GSI) and sound credit risk management by banks.

However, in 2022, FCMB group reported 6.60 per cent NPL ratio as against 4.10 per cent in 2021. Wema Bank in the same year announced 6.08 per cent NPL ratio as against 4.90 per cent reported in the corresponding year.

The management of Wema Bank said, increase of 1.18 per cent in total NPL ratio driven by the decision to be more prudent in managing some assets, stressing that reduction in NPLs across some sectors including general commerce, transport &