Banks’ Non-performing Loans Hit N2tn – CBN

A recently released report by the Central Bank of Nigeria has revealed that times are hard for banks in the country as the industry’s non-performing loans ratio rose from N1.678bn in June to N2.084tn in December 2016.

This was contained in the latest Central Bank of Nigeria’s Financial System Stability Report released on Wednesday.

The financial soundness indicators used to appraise the stability of the financial system included asset quality, capital and income-expense, the report stated.

According to the report, “Commercial banks in the country experienced deterioration in assets quality at end-December 2016. The deterioration in asset quality was largely attributed to the rising inflationary trend, negative GDP growth, and the depreciation of the naira.

“The ratio of regulatory capital to risk weighted assets decreased by 0.8 percentage points to 13.9 per cent at end-December 2016, compared to 14.7 per cent at end-June 2016.

“Similarly, the ratio of Tier-1 capital to risk weighted assets declined by 0.9 percentage points to 12.9 per cent at end-December 2016 from 13.8 per cent at end-June 2016. Despite the marginal decrease, the ratios remained above the Basel minimum threshold.”

“The return on assets declined by 1.0 percentage points to 1.3 per cent at end-December 2016 from 2.3 per cent recorded at end-June 2016, while the ratio of non-interest expenses to gross income increased to 63.8 per cent at end-December 2016 from 54.6 per cent recorded in the preceding half of the year.”