Access Bank, Zenith report N110.8bn Non-Performing Loans

Due to severe macro-economic challenges, two Nigerian Deposit Money Banks (DMBs), Access Bank Plc and Zenith Bank Plc have reported N110.8 billion Non-Performing Loan in 2016.

Most of the Nigerian banks have continued to suffer heavy losses attributable to dwindling global oil, depreciation of the local currency, weak macro environment and rising inflation to per cent 18.6 per cent as at December 2016.

The current macro headwinds has seen a slowdown in economic activities, which has led to rising NPL in the banking sector, according to Central Bank of Nigeria (CBN).

The N110.8 billion NPL recorded by both banks is about 60 per cent or N41.37 billion increase from N69.4 billion in 2015.

The Power, Oil and Gas, manufacturing, general commerce and services sectors account for the highest portion of NPL.
According to our correspondent findings, Access Bank NPL’s increased by per cent from N24.5 billion in 2015 to N39.4 billion in 2016. Access Bank’s NPL forced the bank bad loans to 2.1 per cent from 1.7 per cent recorded in 2015.

Access Bank in a report to investors said the increase reflects the impact of the challenging macro on loan book.
The bank added that Impaired loans in the oil and gas services and construction sectors also contributed majorly to NPL in 2016.

Similarly, Zenith Bank NPL moved to N71.34 billion in 2016 from N44.9 billion in 2015.
Zenith Bank’s bad loans closed last year at three per cent as against 2.2 per cent in 2015.

The bank said it adopted a complete and integrated approach to risk management driven from the Board level to the operational activities of the bank.

Zenith Bank in its report said, “Risk management is practiced as a collective responsibility coordinated by the risk control units and is properly segregated from the market facing units to assure independence. The process is governed by well defined policies and procedures that are subjected to continuous review and are clearly communicated across the group.

“There is a regular scan of the environment for threats and opportunities to improve industry knowledge and information that drives decision making. The group maintains a conservative approach to business and ensures an appropriate balance in its risk and reward objectives.

“Risk culture is continuously being entrenched through appropriate training and acculturation.

Explaining its risk management in the loans to Oil & Gas Sector, the report by Zenith Bank disclosed that, “As price of crude oil continues to fall, the bank has put in place the following to guide against delinquent loans, Encourage customers to increase production capacity to generate more cash flows; Customers are advised to diversify into gas production and restructuring of loans in line with expected cash flow.”