Banks’ outstanding loans hit N13.8tr as deposit drops
A new report has shown that outstanding banking industry loans to the economy as at end of third quarter 2016 (Q3’16) escalated by N2.1 trillion to N13.8 trillion. The new figure indicates about 17.9 per cent rise against N11.7 trillion recorded in the corresponding period of 2015.
The statistics is made up of loans that have matured but remain either unpaid, rolled-over or restructured, as well as new ones created in the period under review.
Indices on selected banking industry statistics for the period by the National Bureau of Statistics (NBS), show that the 17.9 per cent escalation of loan portfolio was coming against just 4.02 per cent growth in deposit base of the banks to N18.1 trillion in Q3’16 from N17.4 trillion within the same period in 2015.
The figures represent a growing funds mismatch, capital adequacy stress and liquidity ratio challenges in the banking industry in line with the report of the Central Bank of Nigeria, CBN, for the first half of 2016 (H1’16) which pointed to inadequacies in funding of banks’ assets (mainly loan portfolio), with about N4.9 trillion funding gap recorded as at end June, 2016. Reporting the funds maturity mismatch for the period ended June 2016, CBN had stated ‘‘the industry pre-shock position revealed that the shorter end of the market (less than or equal to 30-day and 31- to 90-day buckets) was adequately funded.
“In the less than or equal to 30 day bucket, five banks were not adequately funded, while in the 31- to 90- day bucket, nine banks had funding gaps. The cumulative position for the industry showed an excess of N4.9 trillion assets over liabilities.
H1’16 financial stability report the apex bank stated that “large banks were resilient to credit risk and would be able to sustain an impact of the most severe shock of a 200 per cent rise in NPLs (non-performing loans) as it resulted in 12.60 per cent CAR (Capital Adequacy Ratio), which was above the 10 per cent minimum requirement.
“But banking industry, medium and small bank groups, showed vulnerability to the most severe shock of 200 per cent rise in NPLs as their CAR fell to 8.01, 2.51 and -83.32 per cent respectively’’.
The apex bank also said that large banks showed significant resilience to credit concentration risk as their CAR remained above 10 per cent under the respective shocks and scenarios.