The volume of Non-Performing Loans (NPLs) in the Nigerian banking sector increased by N38.05 billion, some 13.30 percent, to N324.14 billion in 2013 from N286.09 billion as at December 2012, even as the sector continues to enjoy relief from purchase of their NPLs by AMCON.
Total loans in the industry stood at N10.043 trillion in 2013, an increase of 23.22 percent over N8.150 trillion reported in 2012.
The top seven banks, including First Bank, GTBank, UBA, Access, Eco Bank and Diamond accounted for 66.10 percent of total loans in 2013, which is however, against 80.73 percent in 2012.
The Nigeria Deposit Insurance Company (NDIC) said asset quality as reflected by the ratio of NPLs to total loans improved to 3.23% in 2013 from 3.51% in 2012, which compared favourably with the industry maximum threshold of 5%.
Despite improvement in asset quality, the corporation is concerned that the rising NPLs in the banking sector could reverse huge gains made since cleaning up the sector not long ago, and needs to be watched.
“Total assets and total credits recorded significant growth rates of 17.10% and 23.22% respectively, in 2013.
“Assets quality recorded a slight improvement as the ratio of non-performing loans to total loans declined slightly from 3.51% in 2012 to 3.23% in 2013.
“Notwithstanding the fall in NPL ratio, the industry needed to watch the growing volume of NPLs which increased by 12.43% in 2013,” the NDIC noted in its 2013 annual report.
Total Operating Expenses in the industry rose by 29.66 percent to N1.388 trillion in 2013 from N1.070 trillion in 2012, figures from the NDIC report show.
But Return on Assets (ROA), Return on Equity (ROE) as well as Yield on Earning Assets (YEA) declined from 22.20 percent, 2.62 percent and 11.92 percent in 2012 to 19.14%, 2.15% and 12.13% in 2013, respectively.
The ongoing banking and regulatory reforms, however, continued to strengthen the resilience of the banking system, as well as impact positively on the financial condition and performance of the Nigerian banking sector in 2013 as depicted by most of the relevant financial indices.
