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CBN goes tough over N777 billion non-performing loans to oil marketers

The Central Bank of Nigeria [@cenbank] has reportedly given a directive to commercial banks for the immediate suspension of interests on the 777 billion non-performing loans to oil marketers.

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The Central Bank of Nigeria (CBN) has reportedly given a directive to commercial banks for the immediate suspension of interests on the N777 billion non-performing loans to oil marketers.

Sources disclosed that the move by the CBN was informed by the worsening portfolio of non-performing loans to oil marketers in the country. According to the report, the failure of the Federal Government to pay fuel subsidy to oil marketers has worsened non-performing loans (NPLs) in recent times.

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Further details: Confirming the development, the Managing Director of SunTrust Bank Limited, Ayo Babatunde disclosed that there was a 100% suspension of income on the oil marketers’ loans by banks. Babatunde reportedly said this while speaking at a seminar organised by the Money Market Workgroup of Financial Market Dealers Association (FMDA) in Lagos.

  • According to the director, CBN might have taken the action to ensure that banks did not report paper profits on NPLs.
  • Meanwhile, Babatunde further raised concern over the CBN policy, mandating banks to lend 60% of their deposits by September 30. He revealed that the move might push some of them to increase lending to high risk-borrowers, with the potential of incurring heavy losses.

“The guideline directing banks to improve lending to the real sector and maintain a minimum loan to deposit ratio (LDR) of 60% (compared to the sector’s LDR of 58.5% as at May and a regulatory maximum of 80%), is subject to quarterly review.

Failure to meet the minimum LDR of 60% by the specified date will result in a levy of additional Cash Reserve Requirement (CRR) equal to 50% of the lending shortfall of the target.

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We need to clarify whether earlier exposure to the preferred sectors can be aggregated for the LDR computation and likely forbearance to banks with high NPLs to the preferred sectors, such as SMEs, retail, mortgage, and consumer lending.”

[READ: Nigeria’s oil and gas sector gulps 777 billion Non-Performing loans]

Why CBN is worried: A look into the NPLs data as released by the National Bureau of Statistics shows that the total NPLs stood N1.69 trillion as of April 2019. Considering the total gross loans of N15.4 trillion, it means that non-performing loans constitute 10.83% of total gross loans.

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  • The breakdown shows that as of April ending, Nigeria’s oil and gas sector accounted for over 60%. Specifically, the NPLs accrued to Nigeria’s oil and gas sector was estimated at N777.84 billion.
  • A closer look at the data reveals that the non-performing loans in the oil sector declined by 93.3 billion as at the end of April 2019.
  • Nairametrics had earlier reported that contractors and investors in the sector had largely depended on bank loans to manage their operations, with many defaulting to pay up.

Key Takeaways: The directive from the CBN to freeze all the interests banks get from the non-performing loans offered to oil markers means NPLs are now a big source of concern to the economy.

  • The CBN may be planning to clamp down on banks that have shady deals surrounding the issue of the non-performing loan which has continued to linger.
  • This is a move by the CBN to consolidate its move to redirect loan facilities to the real sector.
  • Also, this may be a coordinated move to stop accumulated interests, and clamp down on the debtors to recover loans for the banks.
  •  While it remains unknown if the new policy will affect loans granted to other sectors, banks may lose returns on interests which may run into billions.

[READ FURTHER: CBN gives banks 72 hours ultimatum to resolve customers’ complaints]

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Patricia

Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

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Appointments

Fidelity Bank appoints Chike-Obi as Board Chairman

This announcement was contained in a notice signed by the Company Secretary.

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Fidelity Bank has announced the appointment of Mustafa Chike-Obi as Chairman of the Board of Directors. The appointment has been approved by the Central Bank of Nigeria, and will take effect on August 14, 2020, after the expiration of the tenure of the current Chairman, Mr Ernest Ebi.

This announcement was contained in a notice signed by the Company Secretary, Ezinwa Unuigboje, and sent to the Nigerian Stock Exchange.

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Also in the notice, the bank announced the retirement of Mr Seni Adetu, who served as Independent Non-Executive Director on the board. He stepped down from the board after completing his tenure on June 30, 2020.

The board of directors and the management of the bank appreciated Ernest Ebi and Seni Adetu for their contributions to the progress of the bank during their tenures.

“Under the chairmanship of Mr Ernest Ebi, the bank recorded significant growth across key financial metrics, with both Messers Ebi and Adetu playing significant roles, complementing management efforts in the delivery of these milestones; in service of the long-term vision of the bank. The banks market share position has also been materially strengthened over the period,” the notice read.

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The appointment is in line with the bank’s high governance standards and best practices, and in compliance with internal succession policies; Mr Ebi will, over the next six weeks, ensure a successful transition and smooth handover to Chike-Obi.

Mustafa Chike-Obi has over 40 years’ experience in investment banking and the financial services sector, working with reputable global investment banking and asset Management firms. He is currently with the Alpha African Advisory, where he provides leadership and oversees the capital-raising division.

He was the inaugural CEO of the Asset Management Corporation of Nigeria (AMCON), from where he joined Alpha African Advisory.

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He was also founding president at Madison Advisors, a financial services advisory and consulting firm in New Jersey, where he specialised in hedge funds and private equity investment advice.

He holds a bachelor’s degree in Mathematics from the University of Lagos, and an MBA from Stanford University Graduate School of Business.

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Companies

Nigerian Content Intervention Fund increased to US$350 million

The fund expansion was one of the decisions taken at the board’s recent meeting.

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NCDMB, output cut, Petroleum Industry Bill to be passed by mid-2020, says Sylva, FG discovers crude oil in north, says there’s more , OPEC, non-OPEC countries to meet as Saudi, Russia price war affects Nigeria’s budget, FG considers fuel price reduction, OPEC deal: Nigeria to generate additional $2.8 billion revenue as FG reacts

The governing council of the Nigerian Content Development and Monitoring Board (NCMB) announced on Sunday that it has approved a $150 million expansion of the Nigerian Content Intervention Fund, raising it from $200 million to $350 million.

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The fund expansion was one of the decisions taken at the board’s recent meeting on June 16, 2020, chaired by Minister of State for Petroleum Resources, H.E. Chief Timipre Sylva, who is also the Chairman of the Council.

The board said that $100 million from the additional fund would be used to boost five existing loan products, which include manufacturing in the oil and gas industry, asset acquisition of rigs, marine vessels, contract financing for Nigerian oil service providers, contract financing for oil and gas community contractors, and loan refinancing with Nigerian banks.

The council also announced that $20 million and $30 million would be used for 2 newly developed loan product types (the Intervention Fund for Women in Oil & Gas and PETAN Products) which include Working Capital loans and Capacity Building loans for PETAN member companies.

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Started in 2017, the Nigerian content Intervention fund was developed as a $200 Million fund managed by the Bank of Industry, to facilitate on-lending to qualified stakeholders in the Nigerian oil and gas industry on five loan product types.

The NCI Fund is a portion of the Nigerian Content Development Fund (NCDF), aggregated from the one percent deduction from the value of contracts executed in the upstream sector of the oil and gas industry.

According to the NCMB, “About 94 percent of the NCI Funds has been disbursed to 27 beneficiaries as at May 2020.”

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Coronavirus

COVID-19 Update in Nigeria

On the 5th of July 2020, 544 new confirmed cases and 11 deaths were recorded in Nigeria bringing the total confirmed cases recorded in the country to 28,711.

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The spread of novel Corona Virus Disease (COVID-19) in Nigeria touched a new milestone as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 28,711 confirmed cases.

On the 5th of July 2020, 544 new confirmed cases and 11 deaths were recorded in Nigeria, having carried out a total daily test of 2,933 samples across the country.

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To date, 28,711 cases have been confirmed, 11,665 cases have been discharged and 645 deaths have been recorded in 35 states and the Federal Capital Territory. A total of 151,121 tests have been carried out as of July 5th, 2020 compared to 148,188 tests a day earlier.

COVID-19 Case Updates- 5th July 2020

  • Total Number of Cases – 28,711
  • Total Number Discharged – 11,665
  • Total Deaths – 645
  • Total Tests Carried out – 151,121

According to the NCDC, the 544 new cases were reported from 19 states- Lagos (199), Ebonyi (65),Oyo (47), Ondo (46), Ogun (31), Edo (30), FCT (28), Katsina (25), Plateau (15), Bayelsa (11), Kaduna (10), Adamawa (10), Akwa Ibom (8), Gombe (7), Kano (4), Taraba (3), Rivers (2), Abia (2), Ekiti (1).

Meanwhile, the latest numbers bring Lagos state total confirmed cases to 11,244, followed by Abuja (2,181), Oyo (1,513), Edo (1,383), Kano (1,268), Delta (1,227) Rivers (1,183), Ogun (1,005),  Kaduna (865), Katsina (604), Borno (528), Gombe (520), Bauchi (516), Ebonyi (503), Ondo (456), Plateau (436), Abia (385), Enugu (372), Imo (352), Jigawa (318).

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Kwara state has recorded 269 cases, Bayelsa (245), Nasarawa (225), Osun (165), Sokoto (153),  Niger (122), Akwa Ibom (112), Adamawa (99), Benue (97), Kebbi (84), Zamfara (76), Anambra (73), Yobe (61), Ekiti (44), Taraba (22), while Kogi state has recorded 5 cases.

 

READ ALSO: COVID-19: Western diplomats warn of disease explosion, poor handling by government

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Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.

On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020.

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READ ALSO: Bill Gates says Trump’s WHO funding suspension is dangerous

DateConfirmed caseNew casesTotal deathsNew deathsTotal recoveryActive casesCritical cases
July 5, 2020287115446451111665164017
July 4, 202028167603634611462160717
July 3, 2020275644546281211069158677
July 2, 2020271106266161310801156937
July 1, 2020264847906031310152157297
June 30, 202025694561590179746153587
June 29, 20202513356657389402151587
June 28, 20202486749056579007149957
June 27, 20202407777955848625148947
June 26, 20202329868455458253144917
June 25, 20202261459454977822142437
June 24, 20202202064954297613138657
June 23, 20202137145253387338135007
June 22, 20202091967552577109132857
June 21, 202020242436518126879128477
June 20, 202019808661506196718125847
June 19, 202019147667487126581120797
June 18, 20201848074547566307116987
June 17, 202017735587469145967112997
June 16, 202017148490455315623110707
June 15, 20201665857342445349108857
June 14, 202016085403420135220104457
June 13, 20201568250140785101101747
June 12, 20201518162739912489198917
June 11, 2020145546813875449496737
June 10, 20201387340938217435191407
June 9, 2020134646633654420688937
June 8, 2020128013153617404084007
June 7, 20201248626035412395981737
June 6, 2020122333893429382680657
June 5, 20201184432833310369678157
June 4, 2020115163503238353576467
June 3, 2020111663483151332975227
June 2, 20201081924131415323972667
June 1, 20201057841629912312271579
May 31, 20201016230728714300768687
May 30, 2020985555327312285667267
May 29, 202093023872612269763447
May 28, 202089151822595259260647
May 27, 202087333892545250159787
May 26, 2020834427624916238557107
May 25, 202080682292337231155247
May 24, 202078393132265226353607
May 23, 202075262652210217451317
May 22, 2020726124522110200750337
May 21, 2020701633921111190748987
May 20, 202066772842008184046377
May 19, 202064012261921173444757
May 18, 202061752161919164443407
May 17, 202059593881826159441837
May 16, 202056211761765147239737
May 15, 202054452881713132039544
May 14, 202051621931683118038154
May 13, 202049711841646107037374
May 12, 20204787146158695936704
May 11, 202046412421521090235894
May 10, 202043992481421777834794
May 9, 202041512391271174532784
May 8, 202039123861181067931154
May 7, 20203526381108460128184
May 6, 20203145195104553425071
May 5, 2020295014899548123704
May 4, 2020280224594641722912
May 3, 2020255817088240020702
May 2, 20202388220861735119522
May 1, 20202170238691035117512
April 30, 2020193220459731715562
April 29, 2020172819652730713692
April 28, 2020153219545425512322
April 27, 20201337644102559942
April 26, 20201273914152399942
April 25, 20201182873632229252
April 24, 202010951143312088552
April 23, 20209811083231977532
April 22, 2020873912931976482
April 21, 20207821172631975602
April 20, 2020665382311884662
April 19, 2020627862221704362
April 18, 2020541482021663562
April 17, 2020493511841593172
April 16, 2020442351311522772
April 15, 2020407341211282672
April 14, 202037330111992632
April 13, 202034320100912422
April 12, 20203235100852282
April 11, 202031813103702382
April 10, 20203051770582402
April 9, 20202881471512302
April 8, 20202742260442262
April 7, 20202541661442042
April 6, 2020238650351982
April 5, 20202321851331942
April 4, 2020214540251850
April 3, 20202092542251800
April 2, 20201841020201620
April 1, 2020174352091630
March 31, 202013982091280
March 30, 2020131202181210
March 29, 2020111221031070
March 28, 20208919103850
March 27, 2020705103660
March 26, 20206514102620
March 25, 2020517102480
March 24, 2020444102410
March 23, 20204010112370
March 22, 2020308002280
March 21, 20202210001210
March 20, 2020124001110
March 19, 20208000170
March 18, 20208500170
March 17, 20203100030
March 16, 20202000020
March 15, 20202000020
March 14, 20202000020
March 13, 20202000020
March 12, 20202000020
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March 9, 20202100020
March 8, 20201000010
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March 5, 20201000010
March 4, 20201000010
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February 29, 20201000010
February 28, 20201100010

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