Story by Kayode Tokede
As banks are aggressively going after debtors, three leading banks, Access bank plc, FBN Holdings plc and Guaranty Trust Bank plc (GTBank) have recovered a total of N38.1billion from bad debtors in nine months of 2019, our correspondent can report.
The three banks had recovered N8.72billion in prior nine months of 2018.
Our correspondent gathered that the bad loan recoveries contributed to these banks decline in Non-Performing Loans (NPL), although some of these loans were restructured.
Banks in Nigeria have been aggressive in debt recovery with recently publication of debtors list in national dailies.
Also, our correspondent gathered that Access Bank management with an aggressive move continued to recover bad debt acquired from merging with Diamond Plc. Access bank’s NPL closed 2018 at 2.5per cent but significantly grew to 6.4 per cent as at June 30, 2019.
Access Bank standalone prior to the merger had N436billion in stage two loans in his restructured book and after combining with Diamond Bank, it moved to N632billion in June 2019.
Specifically, Access bank for the period under review has recovered N22.43billion from N1.69 billion reported in prior nine months while, GTBank recoveries grew by 87 per cent to N10.9billion in nine months of 2019 from N5.87billion reported in nine months of 2018.
GTBank’s NPL ratio improved to 5.6per cent in September 2019 from 7.3per cent in December 2018.
Complementing the improvement noted in NPLs, GTBank maintained adequate Loan Loss coverage of 95.2per cent for lifetime Credit Impaired Loans (NPLs).
For Zenith bank, the lender’s bad debt recovered moved from N1.15billion in nine months of 2018 to N4.68billlion in nine months o 2019.
The Group Managing Director, Access Bank, Mr. Herbert Wigwe had attributed the group increase in “other income” to bad debt recoveries.
Speaking with analysts/investors in September, he explained that, “the group assets quality improved in the period following the sharp deterioration in March as a result of the assets acquired.
“However, our prudent provisioning and risk management practices ensured that the NPL ratio trended down to as low as 6.4 per cent with significant improvements from 10 per cent as at March 2019.
“This was achieved through a combination of write-offs, recoveries, reclassification and loan restructuring. Basically, we have had to pursue this loan book with a lot of vigour and there have been significant recoveries.
“There have been restructurings which have shown improvements. And there have been significant write-backs of some of the loans that have been fully provided.”
Access Bank in May had threatened to publish the names of all its delinquent debtors, associated persons, directors of the entities if they failed to pay up.
The management of the bank in a statement via its official website, said the directive is in line with the directive from the Central Bank of Nigeria (CBN) and advised all debtors (including former Diamond Bank Plc) to pay up their past due obligations in order to avoid punitive actions.
Finance experts said, banks in Nigeria over the time have engaged debtors with various means to recover their debt. Some have consistently published names of debtors while some have contacted Economic Financial Crime Commission (EFCC) in bad debt recoveries.
They expressed that proposed plan by Central Bank of Nigeria (CBN) to grant banks the approval to directly debit bank accounts belonging to loan defaulters across all banks in the country might boost banks’ debt recovery going forward.
Speaking with our correspondent, t he Executive Vice Chairman, Highcap Securities, Mr. David Adonri was of opinion that banks were following the CBN directive to recover debt in order to loan to real sector, maintaining that some banks might have kick started the directly debit from accounts that belongs to loan defaulters.
He noted that steady global oil prices also contributed to some banks loan recovery.