Ecobank, FBN Holdings report NPL ratio above CBN’s threshold

Ecobank Nigeria and FBN Holdings Plc have reported Non-Performing Loan (NPL) above the Central Bank of Nigeria (CBN)’s five per cent threshold for banks operating in the country.

Though both Tier-1 banks for the half year ended June 30, 2022, recorded decline in NPL ratio, yet it is above the CBN requirement, Westernpost can report.

According to Westernpost findings, Ecobank Nigeria reported 15.50 per cent in NPL ratio in H1 2022 from 16.30per cent reported in full year ended December 31, 2021.

Also, FBN Holdings reported 5.4 per cent in NPL ratio from 7.2 per cent in 2021 FY.

Further findings revealed that FCMB Group Plc, Union Bank of Nigeria Plc, Sterling Bank Plc and Wema Bank Plc have NPL ratio below five per cent.

For instance, FCMB Group closed H1 2022 with NPL ratio of 4.60per cent from 3.30 reported in 2021, while Union Bank of Nigeria’s NPL rose from 4.30 per cent in 2021 FY to 4.40 per cent in H1 2022.

As Sterling Bank’s NPL ratio moved to 1.1 per cent in H1 2022 from 0.7 per cent in 2021, Wema bank announced 3.1 per cent NPL ratio in H1 2022 from 4.9 per cent reported in 2021 FY.

Wema Bank in a presentation to investors/analysts stated that the reduction in NPL ratio is on the back of an increase in collections and recoveries, as well as a growth in loan book

The bank said: “Total non-performing loans for the period was N14.3billion, a 32 per cent decline from the FY 2021 position. General commerce had the largest share at 51 per cent (H1 2022: 34per cent)

“Local currency NPLs experienced a 29 per cent drop to close the six months period at N14.25billion. NPLs declined y-o-y for these sectors: construction, general, manufacturing, admin and support, real estate activities, water supply, sewage, waste management, professional, scientific, and technical activities.”

The CBN had maintained that NPL ratio in the banking sector stood at 5.3 per cent in April 2022, compared with its prudential limit of five per cent, reflecting sustained stability in the banking system, though there remains a need to bring this down to the prudential limit.