Decrease in Non-Performing Loans Reflects Improved Risk Management in Nigerian Banks

Non-Performing Loans (NPLs) held by Nigerian banks decreased from 4.8 percent in April 2024 to 3.9 percent in June 2024, according to recent statements from members of the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) during their July meeting.

Bala Bello, an MPC member, attributed the decline in NPLs to improved risk management practices and the implementation of regulatory measures such as the Global Standing Instruction (GSI) policy.

Bandele Amoo, another MPC member, noted that by the end of July 2024, Nigeria's banking sector remained solid and stable. He highlighted that key indicators such as the NPL ratio, Capital Adequacy Ratio (CAR), and Liquidity Ratio (LR) stayed within the regulatory thresholds.

This development follows the MPC’s decision to raise the nation’s interest rate to 26.75 percent last month to address rising inflation, which reached 34.19 percent in June 2024. The CBN also set new minimum capital requirements for Nigerian banks in April 2024 to support Nigeria’s $1 trillion economic goal.

To enhance loan recovery, the CBN introduced GSI guidelines effective from August 1, 2020.