Non-performing loans in the banking industry fell marginally from 5.8 per cent in May to 5.7 per cent 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.
He said that the system liquidity remained ample even though aggregate domestic credit grew by only 4.30 per cent in June 2021 compared with 4.79 per cent in May 2021.
While credit to the central government declined during this period, the credit to the private sector grew. This progress is largely attributed to the sustenance of the CBN’s credit enhancing policies. The banking sector itself remains stable and resilient, with strong liquidity and capital adequacy ratios.
The ratio of gross nonperforming loans to total loans further declined from 5.8 per cent in May to 5.7 per cent in June 2021.
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.
He added the non-performing loan ratio improved marginally to 5.7 per cent, though it was slightly above the prudential, maximum of five per cent.
“Monetary aggregates developments and money market rates reflected the impact of the bank’s liquidity management measures”.
Kingsley Obiora, a third committee member, said that while non-performing loans were above the regulatory threshold of 5%, they improved from 6.41 per cent in June 2020 to 5.7 per cent in June 2021, owing to improved risk management practices, the Global Standing Instruction policy, and case-by-case regulatory forbearance reviews.