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Why NPLs in 14 banks jumped to N177bn in 2017 H1
…As Zenith Bank records profit within the period
Fresh fact has emerged on why nonperforming loans (NPLs) of 14 leading commercial banks in Nigeria jumped to N177.3bn within the first half of 2017.
Business Hilights observed that whereas the 14 banks recorded credit losses of 22.2 per cent of the net income realised within the first half of the year, Zenith Bank recorded the highest income in the six months period, leaving Ecobank Group with the highest impairment losses of over N40 billion.
According to the Managing Director, High Cap Securities Limited, Mr. David Adonri, “Non Performing Loans, NPL are mounting because borrowers are yet to recover from the economic crisis. Interest income for most banks is mainly from public sector lending which is at high interest rate. For 14 banks to suffer such impairment, it means that there is danger looming.”
Also contributing, image-maker of the Independent Shareholders Association of Nigeria (ISAN), Mr. Moses Igbrude argued that “The implication of increase in loan losses provision is that these banks’ customers default in loan repayment is on the increase, which invariably will lead to low or no returns to the shareholders at the end of the financial year. It is a sign that the loan facilities given are not performing and it has a grave consequence on the banking industry, which means danger looming in the sector”.
Investigations showed that the rise stemmed from the inability of bank customers to meet up their loan repayment plans during the worst period of recession which was within the period under review.
Experts who spoke to Business Hilights on Monday in Lagos said the situation has not really abated as the negative impacts of the squeeze in the economy are still around even though the economy has exited recession.
The affected 14 banks include United Bank for Africa, UBA Plc, Fidelity Bank, Access Bank Plc, Stanbic IBTC, Ecobank Group, Zenith Bank Plc, GTBank Plc, and Diamond Bank Plc. Others are, Sterling Bank Plc, FCMB Plc, Wema Bank Plc, Union Bank Plc, FBN Holding Plc, and Unity Bank Plc.
Besides, the growth rate appeared bearish at 3.6 per cent from N171.243 billion in the corresponding period of 2016, when compared to the net interest income of the 14 banks which stood at N797.567 billion, representing a growth of 28.7 per cent from N619.517 billion recorded in the corresponding period of 2016.
It was also noticed that while First Bank recorded no impairment loss with low interest income, Fidelity Bank posted the least impairment loss of N4.81 billion.
The impairment losses for the period under review showed for top five banks presented the following pictures; Ecobank – N49.016billion at a growth rate of 54.3 per cent from N31.764 billion in the corresponding period of 2016.
Zenith Bank with N34.512 billion has a growth of 196 per cent as Diamond Bank recorded N20.312 billion, representing a growth of 6.9 per cent from N18.998 billion.