Moody's: Reduced NPLs in Nigerian banks credit positive
Moody's Investors Service says the reduced non-performing ratios in Nigerian banks are credit positive as lower Non-Performing Loans (NPLs) reduce the risk of capital erosion from unexpected losses. Akintunde Majekodunmi, Vice President and banking Analyst at Moody’s joins CNBC Africa to discuss some of these decisions and their impact on Africa’s banking sector.
Wed, 04 Dec 2019 12:14:51 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Significant drop in NPLs from 14.1% to 6.6% as of October 2019 indicates positive trend in the banking system
- Reduction in NPLs results in lower provisioning costs and supports banks' net income going forward
- Concerns persist over asset quality and concentration risks within the banking industry, despite the decline in NPLs
Moody's Investors Service has released a report indicating that the reduced non-performing loan (NPL) ratios in Nigerian banks are credit positive for the banking sector. According to Akintunde Majekodunmi, Vice President and banking Analyst at Moody’s, the significant drop in NPLs from 14.1% to 6.6% as of October 2019 is a clear indicator of the positive trend in the banking system. This reduction in NPLs is seen as a result of the banks' efforts in resolving problem loans and writing off non-performing assets. Additionally, the growth in loan portfolios has supported the decline in NPLs, leading to lower provisioning costs for the banks and bolstering their net income prospects. Despite these encouraging developments, there are still lingering concerns regarding asset quality and concentration risks within the banking industry, particularly in sectors like oil and gas and foreign currency lending.
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