In the first half of this year, at least four banks have reported a combined total of N478 billion in non-performing loans, as revealed in their financial reports.

Specifically, Guaranty Trust Bank Holding Plc (GTCO), FBN Holdings Plc, and two other banks disclosed non-performing loans valued at N478.93 billion for the half-year period ending in June 2023.

This marks an increase of nearly 16 percent from the N413.36 billion reported for the full year ending December 31, 2022.

The other two banks included in this report are FCMB Group Plc and Fidelity Bank Plc.

FBN Holdings, with a non-performing loan ratio of about 4.3 percent and gross loans & advances totaling N5.26 trillion, reported N226.24 billion in non-performing loans during H1 2023, compared to N204.29 billion reported in 2022.

In 2022, the holdings declared a 5.4 percent non-performing loan ratio and gross loans & advances of N3.79 trillion.

GTCO declared N115.29 billion in non-performing loans for H1 2023, up from N102.37 billion reported in the 2022 financial year.

GTCO’s presentation to investors and analysts highlighted that “The Group’s IFRS 9 Stage 3 loans closed at 4.6 percent (Bank: 3.6 percent) in H1-2023 from 5.2 percent (Bank: 4.7 percent) in 2022.”

The increase was primarily attributed to exchange rate impact as the Group continued deleveraging in Ghana and Kenya and derecognized fully provided facilities in the Nigerian book.

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Additionally, Fidelity Bank reported N84.73 billion in non-performing loans for H1 2023, compared to N61.37 billion, while FCMB Group disclosed N52.66 billion in non-performing loan value for H1 2023, up from N45.01 billion in 2022.

Banks in Nigeria have continued to write off non-performing loans, and they have also debited the accounts of defaulting debtors as part of efforts to reduce the volume of non-performing loans.

The Central Bank of Nigeria (CBN) introduced the Global Standing Instruction (GSI) guideline in 2020 to address non-performing loans in the banking sector and monitor consistent loan defaulters, among other objectives.

The GSI allows banks to recover outstanding principal and interest upon default from any account maintained by the debtor across all financial institutions in Nigeria.

Regarding regulatory compliance, a report released by the CBN cited Kingsley Obiora, a Monetary Policy Committee member, who mentioned that the capital adequacy ratio (CAR) and liquidity ratio (LR) of banks remained above the minimum thresholds.

Although CAR decreased to 11.2 percent in 2023 from 14.1 percent, it remained above the 10.0 percent prudential requirement.

The LR also exceeded the 30.0 percent regulatory minimum ratio, increasing significantly from 42.6 percent in June 2022 to 48.4 percent in June 2023.