During the first half of 2023, at least four Nigerian banks reported a total of N478 billion in non-performing loans (NPLs), according to their financial reports. Specifically, Guaranty Trust Bank Holding Plc (GTCO), FBN Holdings Plc, and two other banks disclosed N478.93 billion in NPLs by value during the first half of 2023, marking a nearly 16 percent increase from the N413.36 billion reported for the full year ending on December 31, 2022.
The other two banks with significant NPLs are FCMB Group Plc and Fidelity Bank Plc. FBN Holdings, with a non-performing loan (NPL) ratio of about 4.3 percent and N5.26 trillion in gross loans and advances, reported N226.24 billion in NPLs by value in the first half of 2023, up from N204.29 billion reported in 2022. The bank had declared a 5.4 percent NPL ratio and N3.79 trillion in gross loans and advances for the full year 2022.
GTCO reported N115.29 billion in NPLs by value as of the first half of 2023, compared to N102.37 billion reported for the full year 2022. According to GTCO’s presentation to investors and analysts, “The Group’s IFRS 9 Stage 3 loans closed at 4.6 percent (Bank: 3.6 percent) in H1-2023 from 5.2 percent (Bank: 4.7 percent) in 2022. With Individuals and Others emerging as sectors with the highest NPLs i.e., 20.9 percent and 30.96 percent respectively.”
Additionally, Fidelity Bank reported N84.73 billion in NPLs as of the first half of 2023, compared to N61.37 billion, while FCMB Group declared N52.66 billion in NPL value for the first half of 2023, up from N45.01 billion in 2022.
Nigerian banks have continued to write off non-performing loans, and they have also been debiting the accounts of borrowers who are consistently in default to reduce the volume of NPLs. The Central Bank of Nigeria (CBN) introduced the Global Standing Instruction (GSI) guideline in 2020 to reduce non-performing loans in the banking sector and monitor persistent loan defaulters, among other measures.
The GSI allows banks to recover outstanding principal and interest from any account maintained by a debtor across all financial institutions in Nigeria upon default. According to a report from the CBN, the capital adequacy ratio (CAR) and liquidity ratio (LR) for Nigerian banks remained above the minimum thresholds, even though CAR decreased to 11.2 percent in 2023 from 14.1 percent. The LR also increased significantly from 42.6 percent in June 2022 to 48.4 percent in June 2023.