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Banks’ non-performing loan ratio drops to 5.70 % in June



The Central Bank of Nigeria (CBN) said on Tuesday non-performing loan ratio in the Nigerian banking sector dropped to 5.7 percent at the end of June.

The CBN disclosed this in a communiqué issued at the end of its Monetary Policy Committee (MPC) meeting held on Tuesday in Abuja and read by its Governor, Godwin Emefiele.

The communiqué read: “The MPC noted that the Capital Adequacy Ratio (CAR) and the Liquidity Ratio (LR) both remained above their prudential limits at 15.5 percent and 41.3 percent respectively.

“The Non-Performing Loans ratio (NPLs) at 5.70 percent in June 2021 showed progressive improvement, compared with 6.4 percent in June 2020.”

The apex bank said the drop in the NPLs was a sign of reasonable stability in the banking system.

The apex bank, however, promised to sustain its tight prudential regime to bring the NPLs below the 5.0 percent benchmark.

CBN also disclosed that there was a marginal increase in external reserves from $32.78 billion on June 30 to $33.83 billion on July 22.

READ ALSO: Again, CBN’s MPC holds interest rate at 11.5%

It also expressed optimism that the current interventions in various sectors of the economy would further depress inflationary pressure as output growth improves and the negative output gap closes.

On the performance of monetary aggregates, CBN noted that broad money supply (M3) declined to 2.02 percent in June compared to 2.99 percent in May.

This, according to the bank, was caused by the slow growth in the Net Domestic Assets (NDA) and Net Foreign Assets (NFA).

According to CBN, the NFA contracted by 3.65 percent due to the decline in its foreign asset holdings as well as non-interest, primary mortgage, and microfinance banks.

“The marginal decline in Net Domestic Assets reflected the slowdown in aggregate credit net, which decreased to 4.30 percent in June 2021 from 4.79 percent in May 2021,” the communiqué added.

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