Stanbic IBTC non-performing loans rise to N25bn

Non-Performing Loans of Stanbic IBTC Holding Plc have risen by N5bn in the first six months of this year to N25.27bn.

The loans rose from N20.338bn in December 2021 to N25.27bn in June 2022. This indicates a rise from 1.87 per cent in December to 2.32 per cent in June this year, latest data from the bank have shown.

Non-Performing Loans refer to the amount of borrowed funds whose scheduled payments have not been met by the debtors for a period of time usually 90 or 180 days, depending on terms.

Data from the bank’s half year financial statement for 2022 revealed that the bank had a total performing loans of N1.06tn and an NPL of N20.34bn by the end of last year.

Although the figures of the performing loans remained at N1.06tn in June 2022, the NPLs grew to N25.27bn.

The Central Bank of Nigeria exposure drafts on prudential guidelines for financial institutions said, “The NPL limit banks are required to manage their credit risk effectively. To this end, all banks are to ensure that the level of NPLs in relation to gross loans does not exceed five per cent.”

Stanbic IBTC’s NPL is within regulatory limits, but experts believe that there could be a surge in loan defaults in coming months after the CBN increased Nigeria’s benchmark interest rates.

The Governor of the Central Bank of Nigeria, Godwin Emefiele, had revealed a “reduction in the NPL ratio to 4.95 per cent in June 2022, compared with 5.7 per cent in June 2021.”

The apex bank’s MPC wants the bank to sustain its tight prudential regime to ensure that the NPL ratio is brought well below its prudential benchmark.

A 2018 CBN report had revealed that the “drivers of NPLs vary across the two categories of banks, but, weighted average lending rate is a vital macroeconomic driver of NPLs.”

The CBN recently hiked the Monetary Policy Rate to 14 per cent, a move aimed at reducing inflationary pressure, but experts believe it could worsen the NPLs among banks.

This implies that banks will restructure their loans and review upward to reflect the new rate.

Nigeria’s prime lending rate is 12.29 per cent, while maximum lending rate is currently 27.61 per cent, but it is expected to move upwards.