According to the Central Bank of Nigeria, banks recorded N1.3tn in non-performing loans in November, which is still over the industry norm.
According to data acquired from the CBN on Monday, bad loans accounted for 5.4 percent of total gross credit in the banking industry, which is higher than the 5.0 percent prudential threshold.
In a report, CBN Governor Godwin Emefiele stated, “Prudential indicators such as NPLs stood at 5.4% in November 2021, while the CAR remained above 15%, indicating continued resilience of our banking system.”
“Over the last year, total gross credit increased by more than 21.1 percent, from N19.4 trillion to N23.5 trillion.”
At its most recent meeting, the Monetary Policy Committee recommended the CBN to maintain current efforts to reduce NPLs to less than 5%.
During the last Chartered Institute of Bankers of Nigeria dinner in Lagos, Emefiele stated that despite the global COVID-19 issues, the banking system remained robust.
“However, the banking sector remained robust and sound due to the central bank’s prompt response in order to prevent an economic crisis from escalating into a financial crisis,” he said.
“As a result, the banking sector has continued to build on the gains made during the recovery from the 2016 and 2017 recessions.” Although we saw some fragilities in the system, they posed only minor hazards.”
Despite the pandemic, he claimed, the banking sector boosted its loans to the general populace.
He stated that the CBN collaborated with fiscal authorities to implement strong policy support measures capped by the Economic Sustainability Plan, which was designed to contain the effects of the pandemic, restore economic stability by assisting pandemic-affected households and businesses, and lift the economy out of the woods through massive interventions in critical sectors.
“Under this plan, the monetary and fiscal authorities mobilised and injected over N5 trillion to support households and businesses,” he said.
“It is heartening to report that the Central Bank of Nigeria has allocated more than N3.5 trillion – approximately 4.1% of Nigeria’s GDP – to critical sectors such as agriculture, manufacturing, electricity, and healthcare in order to stimulate and aid the economy’s recovery from the deep shock.”
Other particular policy actions implemented, he continued, included lowering the monetary policy rate from 13.5% to 11.5% in order to facilitate the flow of credit to families and companies, as well as lowering the interest rate on CBN intervention loans from 9% to 5%.
He further stated that the apex bank extended the moratorium on principal repayments for the CBN intervention facility till March 2022.