The Deputy Governor, Financial System Stability Department, Central Bank of Nigeria (CBN), Mrs. Aisha Ahmad, has said that 17 commercial banks have submitted requests, as at last month, to restructure over 32,000 loans for individuals and businesses impacted by COVID-19 pandemic.
The pandemic, according to the World Bank, has become a threat to stability in the banking sector and could push another five million Nigerians into the poverty bracket.
The 32,000 loans for individuals and businesses represent 32.94 per cent of total industry loan portfolio, with the manufacturing and general commerce sectors constituting the bulk of the restructured facilities.
Ahmad, in her personal statement at the last Monetary Policy Committee meeting held in May, posted on the CBN’s website yesterday, said the CBN would continue to monitor potential risks to financial stability.
Ahmad said financial soundness indicators remained strong, despite the headwinds and rapid expansion of credit, which increased by N3.0 trillion between May 2019 and the April 2020. The credit growth was driven by the Loan to Deposit Ratio (LDR) policy.
“This resilience notwithstanding, the industry remains exposed to shocks from spillover effects of the pandemic on macroeconomic conditions.
“This underscores the importance of regulatory measures to mitigate the effects of the crisis, such as granting forbearance to banks to temporarily restructure loans for businesses and households most affected by COVID-19 and the Global Standing Instruction policy to limit NPLs,” she added.
According to the CBN deputy governor, results from ongoing impact assessment of COVID-19 effects on impairment by banks indicated modest impact given regulatory policy measures already being implemented. These, coupled with close monitoring by authorities and enhanced risk management practices by financial institutions, would help to mitigate the emerging risks and preserve financial system stability, she said.
“The coronavirus-induced global economic crisis is pervasive, with heightened uncertainty for the medium-term economic outlook.
“In Nigeria, early effects of the crisis and containment measures have reflected in modest decline in output growth, exchange rate depreciation, rising public debts and domestic prices amidst existing structural challenges.
“While these impacts on the Nigerian economy continue to evolve, even as some resilience is acknowledged, particularly in healthier than expected first quarter 2020 Gross Domestic Product numbers, there is urgent need to maintain this trajectory to prevent a recession,” she stated.