Banks’ Impairment Charges Drop Further as Loan Repayment Improves

Banks’ Impairment Charges Drop Further as Loan Repayment Improves

The provisions for loan losses by commercial banks in the country have continued to drop, thereby raising hopes of higher returns on investments for shareholders, THISDAY has learnt.

Loan loss provisions had in 2016 and 2017 financial years impacted negatively on the bottom-lines of many banks due to the devaluation of the naira and difficult operating environment that made a lot of debtors to default in loan repayment, thus increasing the level of non-performing loans (NPLs) in the system.
However, the recently released results of 11 banks for the year ended December 31, 2018, reviewed by THISDAY, showed that the level of impairment charges has reduced significantly.

Precisely, the impairment charges of the 11 bank fell by 64 per cent from N445.403 billion in 2017, to N155.153 billion in 2018.
While all the loans provision of the banks rose by 64 per cent, some banks recorded 80 per cent reduction in loan loss provision.

The 11 banks are Access Bank Plc; Ecobank Transnational Incorporated; Fidelity Bank Plc; Guaranty Trust Bank Plc, Sterling Bank Plc, United Bank for Africa Plc; Union Bank of Nigeria Plc, Unity Bank Plc; Zenith Bank Plc, FCMB Group Plc and Stanbic IBTC Holdings Plc.
For instance, Unity Bank Plc witnessed 99 per cent reduction in loan loss provision, declining from N44.255 billion, followed by Stanbic IBTC with 89 per cent decline. The banks’ provision reduced from N25.577 billion to N2.940 billion.
Also, the United Bank for Africa Plc witnessed 86 per cent decline in impairment charges from N32.895 billion to N4.529 billion, while Zenith Bank Plc’s impairment charges fell by 81 per cent from N98.29 billion to N18.372 billion in 2018.

In the same vein, Fidelity Bank Plc saw a decline of 62 per cent in impairment charges from N11.315 billion to N4.215 billion, while GTBank Plc recorded impairment charges of N4.906 billion in 2018, showing a decline of 62 per cent compared with N12.169 billion in 2017. Similarly, Access Bank’s loan losses provision fell by 57 per cent from N34.466 billion to N14.656 billion.
Similarly, Sterling Bank Plc ended the year with impairment charges of N5.843 billion, indicating a decline of 52 per cent compared with N12.267 billion in 2017 among others.
FCMB Group Plc and ETI saw a decline of 38 per cent and 34 per cent from N22.667 billion to N14.113 billion and N125.893 billion to N82.044 billion respectively.
THISDAY further gathered that contrary to […]

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