During the first half of this year, four banks, including Guaranty Trust Bank Holding Plc (GTCO), FBN Holdings Plc, FCMB Group Plc, and Fidelity Bank Plc, collectively reported non-performing loans (NPLs) amounting to N478.93 billion by value. This represents a nearly 16 percent increase from the N413.36 billion reported for the full year ended December 31, 2022.
FBN Holdings, with a 4.3 percent NPL ratio and gross loans & advances of N5.26 trillion, reported N226.24 billion in NPLs in H1 2023, up from N204.29 billion in 2022. The company had declared a 5.4 percent NPL ratio and gross loans & advances of N3.79 trillion for the 2022 financial year.
GTCO reported N115.29 billion in NPLs by value in H1 2023, compared to N102.37 billion reported in the 2022 financial year. GTCO’s presentation to investors and analysts indicated a decrease in its IFRS 9 Stage 3 loans from 5.2 percent in 2022 to 4.6 percent in H1 2023, with the sectors of Individuals and Others having the highest NPL ratios at 20.9 percent and 30.96 percent, respectively.
In its presentation to investors and analysts, GTCO reported that its IFRS 9 Stage 3 loans decreased to 4.6 percent (Bank: 3.6 percent) in H1-2023, down from 5.2 percent (Bank: 4.7 percent) in 2022. Notably, the sectors with the highest NPLs were Individuals and Others, with NPL ratios of 20.9 percent and 30.96 percent, respectively. The bank also mentioned that its IFRS 9 Stage 3 loans grew slightly to N115.3 billion in H1-2023 from N102.8 billion in 2022, primarily due to exchange rate impacts, as the Group continued deleveraging in Ghana and Kenya and derecognizing fully provided facilities in the Nigerian book.
Fidelity Bank reported N84.73 billion in NPLs as of H1-2023, compared to N61.37 billion, while FCMB Group declared N52.66 billion in NPL value as of H1-2023, up from N45.01 billion in 2022.
Meanwhile, Nigerian banks have continued to write off non-performing loans and have taken steps to reduce the volume of such loans. The Central Bank of Nigeria (CBN) introduced the Global Standing Instruction (GSI) guideline in 2020 to address non-performing loans in the banking sector and monitor consistent loan defaulters, among other objectives. The GSI allows banks to recover outstanding principal and interest upon default from any account maintained by the debtor across all financial institutions in Nigeria.
According to a report by a member of the Monetary Policy Committee, Kingsley Obiora, during the last MPC meeting, the capital adequacy ratio (CAR) and liquidity ratio (LR) of Nigerian banks remained above the minimum thresholds. While CAR decreased to 11.2 percent in 2023 from 14.1 percent, it remained above the 10.0 percent prudential requirement. The LR also exceeded the 30.0 percent regulatory minimum ratio, increasing significantly from 42.6 percent in June 2022 to 48.4 percent in June 2023.
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