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MPC member explains decline in banks’ NPLs

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A member of Nigerian Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), Mr Kingsley Obiora, has averred that the nation’s banking system remained sound, safe and resilient to headwinds.
According to him, the industry Non-Performing Loan ratio was 4.8 per cent at the end of October 2022, compared with 5.3 per cent at the end of the corresponding period of 2021, which was below the prudential maximum of 5.0 per cent.
He added that “The banking sector indicators are robust, similar to the position at the last MPC meeting, with non-performing loans ratio declining further from 4.9 per cent to 4.8 per cent in October 2022 and with further increases in total assets.
“Of particular interest is the addition of above one N1tn in total industry deposits between September and October 2022. Of marginal concern, is the consistent decline in the capital adequacy ratio of the banks between June and October 2022, but this is attributed to increases in total risk-weighted assets, which for some time has been higher than the total qualifying capital.
MPC member explains decline in banks’ NPLs
According to him, “The decline in NPLs was attributable to write-offs, restructuring of facilities, Global Standing Instruction and sound credit risk management by banks. Total assets of the banking industry showed an increase of N12.37tn or 21.58 per cent from N57.30 per cent in October 2021 to N69.67tn in October 2022, driven largely by balances with CBN/banks, investments, and credit expansion to the real sector.
“As a result, the total flow of credit to the economy increased from N23.49tn in October 2021 to N28.81tn in October 2022, representing an increase of 22.66 per cent to the key sectors of the economy, including oil and gas, manufacturing, general, governments and commerce,” Obiora added.

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