There is still a widening gap between the asset quality of Banks as Tier 1 lenders have been shown to have lower non-performing loans (NPLs) compared to the mid-sized lenders.
Tier 2 lenders are still feeling the pinch of an economic downturn that began in 2016, and foreign currency shortages that saw loan books take massive hit.
Guaranty Trust Bank said NPL ratio reduced to 3.79 percent, less than the regulatory threshold of 5 percent, in June 2017. The bank’s NPL ratio was 4.39 percent the previous year.
The Bank’s coverage ratio increased to 222.54 percent in the period under review as against 170.11 percent the previous year. Cost of risk (COR) fell to 0.45 percent in June 2017 as against 2.48 percent the previous year, due to proactive stance of the Bank in the second quarter to create huge collective impairment reserves to act against future credit losses.
Zenith Bank’s NPL ratio moved to 4.30 percent in June 2017 as against 2.30 percent as at June 2016. In absolute figures, NPLs moved to N99.19 billion in June 2017 from N71.37 billion as at June 2016.
Coverage of delinquent loans of the bank improved to 117.0 percent as at June 2017 from 110.30 percent the previous year. Cost of risk increased to 3.60 percent in June 2017 compared to 1.30 percent the previous year.
Zenith Bank has well diversified loan portfolio across sectors support asset quality. Foreign Currency Loans (FCL) in the lender’s balance sheet stood at $3.09 billion (943.12 billion), of which 59 percent or $1.82 billion (N556.30 billion) are to the oil and gas.
Access Bank’s NPLs rose to 2.50 percent, below the regulatory threshold, from 1.90 percent the previous year. In absolute figure NPLs stood at N45.50 billion as coverage ratios improved to 174.80 percent in the period under review as against 169.0 percent the previous year.
For UBA Plc, NPL ratio increased to 4.20 percent in June 2017 from 3.90 percent the previous year. Coverage ratio fell to 119 percent in the period under review from 135 percent the previous year. Cost of risk fell to 1.20 percent in June 2017 as against 2.0 the previous year.
FBN Holdings’ asset quality is not as good as peer rivals as NPLs of 24.39 percent, is way above the regulatory threshold. NPLs in the balance sheet stood at N52.60 billion.
Coverage ratio for the Banking giant increased to 52.70 percent in June 2017 from 41.50 percent the previous year as cost of risk fell to 5.40 percent in June 2017 from 6.50 percent the previous year.
While the Tier one Banks have stable asset quality, except FBN Holdings, the mid-sized banks’ NPL ratios are above the regulatory threshold.
Fidelity Banks’ NPLs fell to 5.80 percent in June 2017 from 6.60 percent the previous year. NPLs in absolute figure was fell to N43.35 billion in the period under review as against N49.40 billion the previous year.
Coverage ratios moved to 98.30 percent in the period under review as against 83.50 percent the previous year. Cost of risk rose to 1.30 percent in June 2017 as against 1.20m percent the previous year.
Fidelity Bank’s total loans to the upstream oil and gas was N135.05 billion while government N101 billion.
Union Bank’s NPL ratio increased to 8.20 percent in June 2017 from 6.91 percent the previous year. Coverage ratios were up to 186.10 percent in June 2017 as against 182.30 percent the previous year.
First City Monument Bank (FCMB)’s NPLs increased slightly to 4.70 percent in June 2017 from 4.60 percent the previous year. NPLs in absolute figures moved to N31.90 billion in June 2017 from N31.70 billion the previous year.
Coverage ratio moved to 132.20 percent in June 2017 from 109.20 percent the previous year while cost of risk remained flat at 2.80 percernt.
There are positive prospects for Nigerian lenders as analysts say that non-performing loans (NPLs) could improve in the near future, buoyed by an uptick in oil production and a favourable foreign exchange policy that saw the country exist a recession.
BALA AUGIE
