Bank is in lost of N3.7tn bad debts

The balance sheets of most of the deposit
money banks
(DMBs) are bleeding badly as a
result of the huge debts portfolio in form of non-
performing loans (NPLs) valued at over N649
billion as at July 2015.
The sum which was grossed over a period last
year is almost at the 5% regulatory threshold, a
development stakeholders argue, call for serious
concern.
A Non-performing loan is one which interest is
overdue and full collection of principal is
uncertain. It is either in default or close to
being in default.
Bengist had reported earlier that a stress test
conducted by the Central Bank of Nigeria (CBN)
investigation by bengist two new generation bank is technically bankrupt, as their Capital Adequacy
Ratios (CARs) fell below regulatory capital
requirement of 10 per cent.
In the last assessment of the balance sheets of
most of these banks, the Central Bank of
Nigeria (CBN) observed that energy companies
in the country are indebted to commercial
banks to the tune of about N3.673 trillion.
This was in spite of several warnings by the
CBN and other economic analysts, against the
backdrop of declining fortune of crude oil in the
international market.
While giving a breakdown of the figures, the
CBN stated that in the industrial segment, oil
and gas firms’ aggregate credit stood at N2.153
trillion as at March 2015, compared to N2.3
trillion in February 2015 and N2.047 trillion as at
December 2014.
Expectedly, by the time most of these banks
closed their books, it became clear that their
overexposure to the oil and gas sector after the
shocks of the global oil prices was not only
going to affect their bottom line substantially,
but would also have a rippled effect on their
loan portfolio.

First Bank of Nigeria net profit fell from N86
billion in 2014 to N15 billion in 2015, following
rising impairments on Nigeria’s economy, owing
to falling crude oil prices.
The bank’s non-performing loans ratio stood at
22percent at the end of March, compared with
3.8 percent a year earlier.
First Bank is not alone as far as NPLs are
concerned. While speaking at the ‘Facts behind
the figures’ held in Lagos recently, the Chief
Financial Officer of Union Bank, Oyinkan
Adewale disclosed that the bank’s non-
performing loans ratio, was 16.99 per cent at
the end of 2015 and 6.90 per cent at the end of
the first quarter of 2016.