Non-performing loans in the banking industry fell marginally from 5.8% in May to 5.7 percent in June, indicating that the banking sector is more resilient.
This was revealed in the personal statements of members of the Monetary Policy Committee by the Central Bank of Nigeria.
According to Robert Asogwa, a member of the MPC, the banking system remained stable with ample liquidity.
“Even though aggregate domestic credit grew by only 4.30 percent in June 2021 compared to 4.79 percent in May 2021, system liquidity remained ample,” he said.
“At the same time that credit to the government was declining, credit to the private sector was increasing. The continuation of the CBN’s credit-enhancing measures is largely responsible for this success.
“With strong liquidity and capital adequacy ratios, the banking sector remains stable and resilient.
“The ratio of gross nonperforming loans to total loans fell further in June 2021, from 5.8% in May to 5.7 percent.”
Repayments and recoveries were recorded in major industries such as oil and gas, manufacturing, construction, and agriculture, according to him.
Folashodun Shonubi, another MPC member, said the banking sector remained resilient and remained the key source of support for the domestic economy.
At the end of June 2021, he added, industry total asset and credit increased even further, while industry liquidity and capital adequacy ratios remained above the statutory minimum.
“The non-performing loan ratio improved marginally to 5.7 percent, though it was still slightly higher than the prudential maximum of five percent,” he continued.
“The impact of the bank’s liquidity management measures was reflected in the development of monetary aggregates and money market rates.”
Kingsley Obiora, a third committee member, said that while non-performing loans were above the regulatory threshold of 5%, they improved from 6.41 percent in June 2020 to 5.7 percent in June 2021, owing to improved risk management practices, the Global Standing Instruction policy, and case-by-case regulatory forbearance reviews.