Microfinance Banks’ non-performing loans drop to N25bn in 2018- NDIC

The microfinance bank industry recorded 5.2 percent decline in non-performing loans to N25 billion in 2018, from N26.18 billion in 2017.

The industry, however, struggled in terms of profitability as profit before tax stagnated at N16.2 billion during the year.

The Nigerian Deposit Insurance Corporation (NDIC) disclosed this in its 2018 annual report, which also revealed 14.7 percent increase in total deposits of the industry to N191.41 billion in 2018 from N166.88 billion in 2017.

The report stated that the MFBs’ sub-sector reported a gross income of N105 billion as at December 31, 2018 against N89.63 billion in 2017.

Interest income also recorded an increase of 3.06 percent from N78.98 billion in 2017 to N81.40 billion in 2018.

Non-interest income slightly improved by 2.25 percent from N23.08 billion as at December 31, 2017 to N23.60 billion as at December 31, 2018.

Profit before tax recorded a marginal increase of 0.06 percent from N16.21 billion in 2017 to N16.22 billion in 2018.

Meanwhile, return on Asset (ROA) and Return on Equity (ROE) decreased from 4.50 percent and 18.90 percent in 2017 to 4.22 percent and 18.19 percent in 2018, respectively.

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The NDIC report read in part:

“The total assets of MFBs stood at N384.50 billion as at December 31, 2018 against N360.59 billion as at December 31, 2017.

“Likewise total loans and advances stood at N221.51 billion in December 2018 against N201.37 billion in December 2017.

“The NPLs decreased by 5.27 percent from N26.18 billion in December 2017 to N24.8 billion in December 2018. Similarly, the NPLs (portfolio-at-risk) ratio improved from 13 percent in 2017 to 11.20 percent in 2018 but still above the regulatory threshold of five percent.

“The MFBs’ total deposits increased, by 14.7 percent from N166.88 billion in 2017 to N191.41 billion in 2018. The average liquidity ratio also increased from 72.54 percent in 2017 to 73.95 percent in 2018, and above the minimum regulatory threshold of 20 percent.

“MFBs’ loan to deposits ratio stood at 115.73 percent as at December 31, 2018 against 120.66 percent as at December 31, 2017.”

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