NPL: Banks recover N738.15bn from oil & gas sector – NBS


National Bureau of Statistics (NBS) has disclosed that banks recovered a total of N738.15billion Non –Performing Loan (NPL) from oil & gas sector third quarter (Q3) 2019.

This is on the backdrop of Central Bank of Nigeria’s (CBN) drive to solve liquidity challenges in financial sectors.

The latest report released by the bureau for Q3 2019, NPL in the oil and gas sector dropped from N1.002 trillion in Q3 2018 to N264 billion in Q3 2019, suggesting that in one year, banks recovered N738.15 billion NPL in the sector.

However, Nigeria NewsDirect gathered that the bad loan recoveries contributed to these banks decline in 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 bn 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 N4.68billion in nine months of 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 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 time 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 the proposed plan by 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.

The latest NBS report shows that there was a major drop in NPL across sectors in the last one year, as Nigerian banks recovered loans from 16 sectors.

The NBS report breakdown revealed that, Banks recovered N738.15 million from the oil and gas sector; Power and Energy (N116.01 billion); Real Estate Activities (N74.02 billion); Manufacturing (N43.67 billion); Information and Communication (N39.40 billion), and Finance and Insurance (N34.42 billion).

Other sectors that witnessed reduction in NPL include Transportation and Storage (N32.27 billion); General (N26.42 billion); Scientific and Technical Activities (N5.19 billion); Mining and Quarrying (N2.69 billion); Art, Entertainment and Recreation (N2.36 billion); Human Health and Social Work Activities (N1 billion); Administrative and Support Services (N620 million); Capital Market (N600 million), and Public Utilities (450 million).

Meanwhile, NPL rose in a few sectors within the period as construction tops the list. The Bureau’s report shows that NPL in construction rose to N81.60 billion – an increase of N9.25 billion in one year.

Other sectors that recorded a rise in NPL include the agricultural sector (N49.96 billion); education (N8.69 billion); government (N1.28 billion), and waste management (N2.24 billion).

According to the report, the percentage of non-performing loans to the total loan dropped to 6.67 cent at the end of Q3 2019. Although the Central Bank recently disclosed that the ratio of NPL to total loans had declined further to 6.56per cent at the end of October 2019 from 6.67 cent in September 2019.