Access Holdings Plc, Zenith Bank Plc, Wema Bank Plc, FCMB Group, Union Bank of Nigeria Plc and Stanbic IBTC Holdings Plc, Guaranty Trust Holding Plc, United Bank for Africa Plc, and Ecobank Nigeria aggregate non- performing loan has increased to N814.08billion in 2021, representing a 3.16 percent increase from the N789.14billion reported in 2020.
However, some of the nine banks remained within the five percent NPL ratio stipulated by the Central Bank of Nigeria.
Further findings also show that while some of the banks recorded an increase in their NPLs during the period under review, a number of them recorded a significant decline in their NPLs. Punch reports
According to the banks’ audited 2021 financial statements, findings showed that Access Holdings, Zenith Bank and GTCO reported the top three highest NPL by value among the nine banks, while Stanbic IBTC Holdings reported the lowest.
In 2021, Access bank reported N181.5 billion NPL by value, representing an increase of 4.3 percent from the N161.2 billion it recorded in 2020, while Zenith Bank’s NPL hit N146.8 billion in 2021 from N125.2 billion recorded in 2020, an increase of 17.3 percent.
Zenith Bank explained in a presentation to investors/analysts that it adopted a complete and integrated approach to risk management that was driven from the Board of Directors’ level to the operational activities of the bank.
It further explained that its risk management was practiced as a collective responsibility coordinated by the risk control units and is properly segregated from the market-facing units to assure independence.
“There is a regular scan of the environment for threats and opportunities to improve industry knowledge and information that drives decision making.
"The group maintains a proactive approach to business and ensures an appropriate balance in its risk and reward objectives,” the bank explained.
In 2021, Wema bank reported N21.3 billion NPL, an increase of 19.3 percent from N19.3 billion in 2020, while FCMB Group’s NPL rose to N45.93 billion, representing a 61 percent increase from N28.57 billion it reported in 2020.
Others are Union Bank of Nigeria with N38.66 billion NPL in 2021 from N29.45 billion reported in 2020, as Stanbic IBTC Holdings reported a 23.4 percent drop in its NPL to N20.3 billion in 2021 from N25.5 billion in 2020.
Furthermore, GTCO’s NPL value rose by 2.3 percent to N113.94 billion in 2021 from N111.43 billion reported in 2020, while UBA closed 2021 with N96.5 billion NPL value from N120.08 billion reported in 2020, indicating a significant reduction in its NPL.
In addition, ECO Nigeria reported N149.15 billion NPL by value in 2021 from N167.41 billion in 2020, a decline of 11 percent.
Ecobank Nigeria reported an NPL ratio of 16.6 percent in 2021 from 19.6 percent in 2020.
Access Holdings closed 2021 with an NPL ratio of 4.3 percent as against four percent in 2020, as Zenith Bank NPL ratio dropped to 4.2 percent in 2021 from 4.3 percent in 2020.
According to analysts, the NPL ratios in the banking sector remained stable in 2021, following the CBN’s forbearance for restructuring loan exposure to critical sectors.
Extract from the banks’ performance revealed that GTCO reported a drop in its NPL to 6.04 percent in 2021 from 6.39 percent in 2020, while ETI Nigeria reported a 16.30 NPL ratio in 2021 from 19.90 percent in 2020.
GTCO in a presentation to investors/ analysts explained, “The Group improved its asset quality with IFRS 9 Stage 3 loans closing at 6.04 percent in 2021 from 6.39 percent in 2020.
“The marginal increase in prudential NPLs from 6.86 percent to 6.92 percent was as a result of stress noted with certain exposures within the hospitality, individuals, clubs, co-operative societies and unions as the obligors within these sectors were severely impacted by Covid-19.
“Downstream sector benefited from the N7.2 billion write-off in FY 2021 as its NPLs improved to 8.6 percent in 2021 from 11 percent in 2020.
“IFRS 9 Stage 3 loans closed at N113.9 billion as of FY 2021 increasing by 2.2 percent from N111.5 billion in 2020.
"Balance Sheet Impairment Allowance for Stage 3/Lifetime Credit Impaired exposures closed at N57.5 billion representing 50.5 percent coverage of loans in this classification.
“In aggregate terms (including Regulatory Risk Reserves of N87.6 billion), the Group has adequate coverage of 150.4 percent for its Stage 3 names/NPLs, this position is consistent with the group’s plan to maintain 100 per cent coverage for its NPLs.”
UBA, Access Bank, and Zenith Bank, among other banks, reported NPL ratio below five per cent in the 2021 financial year.
For instance, UBA’s NPL dropped to 3.60 per cent from 4.70 percent in 2020.
Speaking on its NPL decline performance, UBA’s Group Chief Financial Official, Ugo Nwaghodoh said, “This testifies to the quality of UBA’s loan portfolio even as the bank remains relentless in its resolve to drive down the Cost-to-Income ratio, which stood at 63.0 percent at the end of the year.”
Access Bank reported 4.00 percent NPL ratio in 2021 from 4.30 percent, while Zenith Bank reported 4.20 percent NPL ratio in 2021 from 4.30 percent in 2020.
Stanbic IBTC Holdings reported 2.10 percent NPL in 2021 from 4.00 percent reported in 2020.
The Chief Executive, Stanbic IBTC, Dr Demola Sogunle in a statement said the NPLs ratio moderated to 2.1 percent, well within the acceptable limit of five per cent, as the total NPLs decreased in value by 23 percent coupled with the responsible loan growth in line with the management conservative credit risk management practices.
In addition, Wema Bank reported NPL ratio declined from 4.9 percent in 2020 to 4.5 percent in 2021, as Union Bank of Nigeria’s NPL ratio moved from 4.00 per cent to 4.30 per cent in 2021.
FCMB group closed 2021 with 4.10 percent NPL ratio from 3.3 percent in 2020.
Members of the Monetary Policy Committee of the CBN, thus, applauded the management’s efforts in ensuring the continued downward trend of NPLs ratio, signifying improving conditions in the banking system
The MPC members also noted the sustained resilience of the banking system, following the progressive improvement in the NPLs ratio from 5.10 percent in November 2021 to 4.85 percent in December 2021- a first in a long time.
In her personal statement, a member, CBN Deputy Governor, Aishah Ahmad, said NPLs dropped to its lowest level in over a decade despite the increased lending by banks.
She noted that total credit had increased by N4.09 trillion between the end of December 2020 and December 2021, with significant growth in credit to manufacturing, general commerce, and oil and gas sectors.
“Key industry aggregates also continued their year-on-year upward trajectory with total assets rising to N59.24 trillion in December 2021 from N50.99 trillion in December 2020, while total deposits rose to N38.42 trillion from N32.21trillion over the same period.
“Total credit also increased by N4.09 trillion between end of December 2020 and end of December 2021 with significant growth in credit to manufacturing, general commerce, and oil & gas sectors.
“This impressive increase was achieved amidst continued decline in non-performing loans ratio from 5.10 percent in November 2021 to 4.94 percent in December 2021, 6 basis points below the regulatory benchmark for the first time in over a decade.”