17 banks seek CBN approval to restructure 33% of credit facilities
About 17 Nigerian banks have approached the Central Bank of Nigeria (CBN) for approval to restructure 32.94 percent of their credit facilities due to the fallout from the coronavirus pandemic and a slump in oil prices, the regulator said.
“As at end-May 2020, staff reports indicate that 17 banks submitted requests to restructure over 32 thousand loans for individuals and businesses impacted by the pandemic, representing 32.94 percent of total industry loan portfolio, with the manufacturing and general commerce sectors constituting the bulk of the restructured facilities,” CBN deputy governor Aishah Ahmad said in a note to the last Monetary Policy Committee (MPC) meeting.
Ahmad, however, said the results from ongoing impact assessment of Covid-19 effects on impairment by banks shown modest impact given regulatory policy measures already implemented.
“These, coupled with close monitoring by authorities and enhanced risk management practices by financial institutions, would help to mitigate the emerging risks and preserve financial system stability,” the deputy governor wrote in her note.
She said the nation’s financial system remains a bright spot of the economy and is well-positioned to support domestic output growth, and stimulate economic recovery.
According to her, banks continue to expand credit portfolio to the economy as gross credit increased by 3 trillion in May 2019 to April 2020, driven by the Loan to Deposit Ratio (LDR) policy.
Also, she disclosed that the Non-performing loans (NPLs) ratio stood at 6.6 percent at end of April 2020, compared with 11.0 percent at end of April 2019, while other prudential ratios remain robust.
“Credit to the oil and gas sector accounted for about 26% of the industry’s total loans and advances, making the sector the single most important in terms of credit exposure of the banking system,” Edward Adamu also a member of MPC wrote in his note.
“Related to this source of vulnerability is the foreign-currency exposure of the industry which stood at approximately 41 percent in April 2020.”
– With report from Bloomberg