Why over 32,000 loans in 17 banks may be restructured – CBN

Due to the negative impacts of Coronavirus pandemic on Nigeria’s economy, no fewer than 32,000 loans in 17 banks for individuals and businesses maybe restructured, Deputy Governor Central Bank of Nigeria (CBN) Aishah Ahmad has revealed.

This is because 17 affected banks have submitted requests to restructure more than 32,000 loans, which represents 32.94 per cent of the total industry loan portfolio.

The CBN Deputy Governor , made this disclosure in her Monetary Policy Committee (MPC) notes, which was shared via the Twitter handle of the apex bank.

According to her “As at end-May 2020, staff reports indicate that 17 banks submitted requests to restructure over 32 thousand loans for individuals and businesses impacted by the pandemic, representing 32.94 per cent of the total industry loan portfolio, with the manufacturing and general commerce sectors constituting the bulk of the restructured facilities.”

Ahmad explained that the results from the ongoing impact assessment of COVID-19 effects on impairment by banks indicate modest impact given regulatory policy measures already implemented, adding that these, coupled with close monitoring by authorities and enhanced risk management practices by financial institutions, would help to mitigate the emerging risks and preserve the financial system stability. Central Bank of Nigeria (CBN) Communique No. 130 of the Monetary Policy Committee Meeting held on May 28, 2020, with Personal Statements of Members.

She said the majority of the loans to be restructured were within the manufacturing and general commerce sectors.

“Results from ongoing impact assessments of COVID-19 effects on impairment by banks indicate a modest impact given regulatory policy measures already implemented,” Ahmad said.

FCMB said in May that it was restructuring half of its loans, mainly involving the oil and retail sectors.

The central bank in March said it would allow lenders to give customers more time to repay loans and create a fund to combat the impact of the coronavirus pandemic, which triggered an oil price crash and weakened the currency.

Before the pandemic, the central bank forced banks to lend to stimulate an economy mired in low growth. 

Total loans grew N3 trillion to N18.6 trillion over the last year ending in April,

The oil price crash also hurt energy companies, long the most favoured sector for bank loans. In April, credit to the oil sector accounted for 26% of all corporate loans, another MPC member, Adamu Lametek, said in the statement.