CBN: NPLs rate drops to 9.6% in 40 months
Commercial banks recorded their first single digit Non-Performing Loans (NPLs) rate of 9.36 per cent in 40 months, Central Bank of Nigeria (CBN) Deputy Governor, Financial System Stability, Mrs. Aishah Ahmad, has said.
In her statement in the last Monetary Policy Committee (MPC) meeting in Abuja released yeatreday, she said the banking industry soundness indicators remain positive with NPL ratios turned single digit at 9.36 per cent in June 2019 for the first time in 40 months.
According to her, industry capital adequacy, liquidity and profitability remain robust. “However, several months of low credit to the private sector amidst burgeoning treasury securities activity prompted the Central Bank of Nigeria’s (CBN) policy statement on July 3, mandating DMBs to build up their minimum loan to deposit ratio (LDR) to 60 per cent over a three-month period, with additional incentives (150 per cent weighting) for newmall and medium enterprises, retail, mortgage and consumer loans,” she said.
Ahmad said focus on the minimum industry LDR is expected to stimulate additional private sector credit growth, reduce credit concentration in energy assets and large corporates and lower the cost of credit – which has remained sticky downwards despite recent decreases in treasury yields. This expanded finance for individuals and small businesses will create jobs, enhance consumer spending and stimulate growth. Whilst some DMBs are gradually increasing credit to retail, MSMEs and the informal sector through innovative products and technology platforms, the policy initiative seeks to replicate this focus, and ramp up SME credit growth momentum across the entire industry.