Non-performing loans in banks still minimal, says UBA boss

Oduoza

The Group Managing Director, United Bank for Africa (UBA), Phillips Oduoza, on Friday said the Non-Performing Loans (NPLs) in the banking sector was still minimal.

Oduoza said that NPLs had not reached the five per cent threshold set by CBN for the sector.

He said that as long as banks were still doing business, the NPLs would rise, adding the authorities were working hard to ensure stability in the financial system.

The 2013 Annual report of the Nigeria Deposit Insurance Corporation (NDIC) said the volume of NPLs increased by N38.05 billion or 13.30 per cent to N324.14 billion in December 2013 from N286.09 billion in 2012.

The NDIC said the total loans in 2013 stood at N10.04 trillion, an increase of 23.22 per cent compared to N8.15 trillion in 2012.

``As you create risk assets, you also find out that particular portion of that will continue to deteriorate because the banks are open to business therefore the NPLs must come.

``If you look at it, the volume of loans that have been created over the period has multiplied several times.

``So, a significant portion of that also falls within NPLs. But that does not mean that we are above the threshold of five per cent,’’ he said.

He said that the Nigeria banking industry ``is very stable’’ with the establishment of Asset Management Company of Nigeria (AMCON) helping to de-risk the entire industry.

He said that a lot of the toxic assets were sent to AMCON and since then the limit of five per cent had been put for the non performing loans of the banking industry.

Oduoza said that banks were now operating within this particular range.

``I believe that all of us have learnt our lesson from what happened during the last global crisis and banks have put very strong risk management framework just to make sure that risk asset quality is very high.

``Market risk is at its peak and banks have known how to distribute in such a way that you don’t have so much concentration in one particular sector.

``So the banking industry is very strong today,’’ the UBA boss said.