Banks Non-Performing Loans moderate to 14.05% in October say MPC members

Though still above regulatory threshold of five percent, the Non-Performing Loans (NPLs) ratio of the Nigerian deposit money banks, which had risen to 14.70 per cent in August 2018 has declined to 14.05 per cent in October which signals an improvement.

Robert Asogwa, member of the Monetary Policy (MPC) said this in his personal statement at the last meeting held in November, which was released on Wednesday by the Central Bank of Nigeria (CBN).

He said the modest improvement in the Capital Adequacy Ratio (CAR) and the Profitability Indicators (ROE and ROA) in October as compared to August shows that the financial sector weaknesses which were a key concern at the last MPC meeting of September are partly being halted.

Adeola Festus Adenikinju, member of the MPC also admitted that the report on the banking system stability shows some improvements across major financial soundness indicators, like the capital adequacy ratio, liquidity ratio, returns on equity and assets as well as the NPLs ratios.

This according to Adenikinju is an indication that the measures taken by the Apex bank have started to yield some positive results.

“I am also pleased about additional measures being considered by the Bank to ensure the continuous soundness of the banking and financial sector. This is critical to address the incidence of NPLs, improve credit flow to the economy and perhaps more importantly, boost confidence of the banking public on the overall soundness of the financial sector”.

Dahiru Hassan, another member of the MPC noted that the ratio of credit to gross domestic product (GDP) is low. “Credit to other sectors of the economy, particularly when Deposit Money Banks (DMBs) are not willing to do so is weak; therefore, we can encourage the establishment of more micro-finance banks and strengthen the existing ones so as to improve access to credit to poor. However, this may result into conflict of interest to the CBN”, Hassan said.

HOPE MOSES-ASHIKE