NPL: Eight banks post N117.7bn impairment charges


As deposit money bank witnessed increase Non-performing loan in 2015,
Eight of them have reported N117.7 billion impairment charges  for the nine- month ended September 2015.

The same eight banks had recorded N52.44 billion impairment charges in prior nine-month of 2014, an indication that loans could actually be higher side as most banks are yet to understand the full recoverable value of their loans.

Stanbic IBTC Holdings Plc led the chart with about 521.3 per cent growth in impairment charges for the nine-month under review from N2 billion to N12.5 billion.

First Bank Holdings Plc came  second with about N46.6 billion impairment charges, 249per cent above N13.36 billion recorded in prior nine-month results.

Specifically, First Bank of Nigeria Holdings impairment charge alone accounts for about half of what other Tier-I banks (United  Bank for Africa, Zenith Bank and Access Bank )considered incurred combined.

United Bank for Africa declared 103per cent  increase in impairment  charges from N2.3 billion to N5.4 billion while Zenith Bank recorded a rise of 99.2 per cent to N9.7 billion in September 2015 from N4.88 billion in September 2014.

Access Bank with impressive earnings recorded 66 per cent growth in impairment charges from N6.96 billion to N11.6 billion in September 2015.

Guaranty Trust Bank had the lowest impairment charges that rose by 35 per cent from N6.3 billion to N8.5 billion in September 2015.

Inside Business has  also observed that some Tier II banks equally recorded significant growth in impairment charges.

For example, Fidelity Bank took a charge of N3.9 billion in September 2015 from N1.89 billion in September 2014 while Diamond Bank took a charge of N19.49 billion as against N14.69 billion in the prior nine-month unaudited accounts

Checks revealed that banks, which have released their corporate results for the nine-month so far, have increased their impairment charges for bad loans, a development finance analysts said is principle in prudent loan management.

Since  the major banking reform embarked upon by the Central Bank of Nigeria(CBN) in 2009/2010 in the banking industry, which led to improved risk management strategies by banks, it was expected that impairment charges that have also negatively affected the profitability of banks, would reduce.

However, the operating environment continues to through up challenges that have made banks to raise their level of provisioning for bad loans.

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