The Nigerian banking industry witnessed a 15.69 percent rise in bad loans in 2020, the National Bureau of Statistics (NBS) disclosed this in its banking sector report released on Sunday.
This is an indication that N166.29 billion loans have not been paid by bank creditors in over 90 days.
A loan is regarded as a bad debt or non-performing loan when the borrower has not made repayments of principal and/or interest for at least 90 days.
According to the report, non-performing loans (NPL) in Nigerian banks increased to N1.22 trillion at the end of December 2020 from N1.059 trillion recorded the previous year.
The report noted that the Non-Performing Loans (NPL) ratio is 6.02 percent above the Central Bank of Nigeria (CBN) acceptable ratio of five percent, indicating commercial banks are carrying more underperforming loans than expected.
A sectoral analysis of the NPL data indicated that oil and gas contributed the largest share as bad loans from oil and gas companies increased by 43 percent from N219.91 billion in December 2019 to N315.3 billion in 2020.
This was followed by the construction sector, which had N170.59 billion bad loans, increasing by 97.44 percent from N86.40 billion in 2019.
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The general commerce also contributed significantly to the bad loans in the banking industry as it recorded a 7.41 percent rise from N145.26 billion in 2019 to N156.02 billion.
Other sectors that have witnessed an increase in non-performing loans include information and communication (N112.11 billion), real estate (N56.03 billion) and finance and insurance (N5.26 billion).
Human health and social work (N16.97 billion), professional, scientific, and technical (N11.87 billion), arts, entertainment and recreation (N9.42 billion), administrative and support services (N5.65) and capital market (N0.32 billion) completed the list.
Despite the rise in NPLs last year, nine sectors including agriculture, mining and quarrying, manufacturing, public utilities and transportation, power and energy, government, and education all recorded a decline in their exposure to bad debts.
