By Celestine Ajayi
The Central Bank of Nigeria, CBN has given a clean bill of health to Deposit Money Banks in the country despite the consequent rise in Non-Performing Loans to 6.3% which is above the 5.0 percent prudential benchmark.
In the CBN’s 2020 4th quarter economic report, the NPL ratio for December stood at 6.1% up from 6.06% in December 2019. Despite the rise in NPL, the apex bank still believes Nigerian banks are healthy.
“The health of banks was generally sound, although the quality of their assets, measured by the ratio of Non-Performing Loans (NPLs) to industry total outstanding loans, stood at 6.1 percent at end-December 2020, compared with 6.06 percent at end-December 2019 and above the 5.0 percent prudential requirement.”
The CBN, therefore, urged the Banks to sustain their regulatory measures to bring it below the prudential benchmark.
Meanwhile, the Capital Adequacy Ratio which measures the balance sheet strength of banks improved from 15.1% in December 2020 to 15.2% in February 2021. It is still lower than the 15.4% reported in September 2020.