Deposit Money Banks in the country recorded an increase of N56.31bn in their non-performing loans at the end of August, the Central Bank of Nigeria has said.According to the CBN, the banks’ NPLs increased by 16.36 per cent, up from N344.26bn recorded in August 2013 to N400.57bn in the same period of this year.
The Deputy Governor, Economic Policy, CBN, Dr. Sarah Alade, said in a statement made available on Sunday that gross loans by the banks increased by 21.03 per cent from N9.278tn in August last year to N11.229tn in August 2014.
“Impaired loans increased by 16.36 per cent from N344.26bn at end-August 2013 to N400.57bn at end-August 2014, of which 66.84 per cent (N267.74bn) loans loss provisions had been made. However, the NPLs ratio stood at 3.57 per cent at end-August 2014, representing a decrease of 14 basis points compared with the corresponding period of end-August 2013,” she said.
According to her, the banks remain adequately capitalised with an average Capital Adequacy Ratio of 17.75 per cent at the end of August 2014, as against 18.1 per cent at the same period of last year, using the Basel I capital adequacy framework.
Alade said the decline was due largely to increase in risk weighted assets, adding that under the Basel II framework, the industry Capital Adequacy Ratio stood at 15.76 per cent as of the end of August 2014.
She stated that two unnamed banks fell below the prudential minimum of 10 per cent in the period under both the Basel I and II frameworks.
“The banks have been engaged to recapitalise to meet the regulatory minimum and are being closely monitored for compliance,” she added.
According to the CBN chief, the industry liquidity ratio declined from 50.6 per cent at the end of December 2013 to 42.6 per cent by June 2014 due to the increased Cash Reserve Requirement.
She noted that by end-August 2014, the ratio stood at 43.87 per cent, adding that all the DMBs met the prudential minimum requirement of 30 per cent during the period under review.
The CBN noted that total bank deposits grew by 5.94 per cent or N937.74bn from N15.783tn in August 2013 to N16.72tn a year after.
It said the industry’s unaudited profit before tax decreased marginally by about 0.004 per cent from N385.68bn for the period January to August 2013, to N385.67bn during a similar period in 2014.
It stated that the return on assets and return on equities declined from 2.63 per cent and 22.47 per cent in August 2013, to 2.39 per cent and 20.36 per cent as of August this year.
“The decline was due to high overheads, implementation of the revised guide to bank charges, increased contributions by banks to the AMCON sinking fund and increase in CRR, among others,” Alade said.
She noted that the country’s external reserves balance was $39.37bn as of October 13, 2014, from $42.85bn at the end of December 2013, and that this would cover approximately seven months of import.
The deputy governor said the performance of the external reserves had been fluctuating throughout this year.
On developments in the domestic economy, Alade said the Gross Domestic Product growth in the second quarter of this year was 6.54 per cent, with the services subsector contributing 36.9 per cent; agriculture, 20.9 per cent; and trade, 16.8 per cent, as major drivers of growth.