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BANKING & FINANCECOVERNEWSLETTER

Commercial Banks To Reduce Lending Over Rising Non-performing Loans

Nigerian banks have unveiled plans to cut back on loans in 2016 following the rising spate of non-performing loans of banks which stemmed from the nation’s dwindling economy and global oil price crash.

Bankers have said that they will be preserving capital and may not give out as much loans in order to absorb the shocks that will arise from making provisions for bad loans.

Director of Banking Supervision of the CBN, Tokunbo Martins, who briefed newsmen at the end of the 326th Bankers Committee Meeting which comprise of the Central Bank of Nigeria (CBN), Deposit Money Banks (DMBs) and the Nigeria Deposit Insurance Corporation (NDIC), said despite the build-up of NPLs in Nigeria’s banking industry, the lenders have enough capital to absorb shocks arising from bad loans.

Martins who identified falling oil prices as the major cause of rising NPLs in the industry, assured that the situation is not out of control, adding that the committee discussed possible ways of arresting the situation which might involve debt factoring among others.

“The most important thing is that banks are conscious of it. They are preserving capital.”

“They have enough capital as we speak. They are not distributing loans as much as they would have, in anticipation of risks that might crystalize and knowing in their hearts that they need to have enough capital to absorb those risks as they happen,” she said.

 

 

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