The economic downturn has taken its toll on banks, with four significant lenders reporting N478bn in non-performing loans (NPLs) for the first half of 2023. Financial results reveal a concerning 16% rise from N413.36bn recorded for the entire year of 2022.

Specifically, the banks in question include Guaranty Trust Bank Holding Plc (GTCO), FBN Holdings Plc, FCMB Group Plc, and Fidelity Bank Plc.

FBN Holdings, with an NPL ratio of 4.3% and gross loans and advances totaling N5.26trn, reported N226.24bn in NPLs during H1 2023. This is a noticeable increase from the N204.29bn in 2022.

GTCO, on the other hand, reported N115.29bn in NPLs for H1 2023, up from N102.37bn in 2022. Their internal data highlights that sectors labeled “Individuals and Others” have experienced the highest NPLs, standing at 20.9% and 30.96% respectively. An exchange rate impact played a role in this trend.

Furthermore, Fidelity Bank reported N84.73bn NPLs in H1 2023, which is up from N61.37bn. The FCMB group’s NPLs reached N52.66bn for H1 2023, a jump from N45.01bn in the previous year.

Despite these troubling figures, banks are taking proactive measures. They’ve continued to write off bad loans and debit the accounts of persistent defaulters to mitigate the rise of NPLs.

In an effort to combat the surge in non-performing loans, the Central Bank of Nigeria (CBN) introduced the Global Standing Instruction (GSI) guideline in 2020. This directive enables banks to recover defaulted amounts, including principal and interest, from any of the debtor’s accounts across all Nigerian financial institutions.

According to Punch, recent CBN reports confirm that while the capital adequacy ratio (CAR) has dropped to 11.2% in 2023 from 14.1%, it remains above the 10.0% prudential benchmark. Kingsley Obiora, a Monetary Policy Committee member, emphasized that the Liquidity Ratio (LR) surged from 42.6% in June 2022 to a robust 48.4% in June 2023, surpassing the 30.0% regulatory minimum.