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Home Industries Financial Services

CBN’s Emefiele explains why banks restructured N7.8 trillion loans to customers

Emmanuel Abara BensonbyEmmanuel Abara Benson
3 years ago
in Financial Services
Currency outside banks drop to N788.9billion in January 2023

Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN)

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While answering questions at the end of yesterday’s Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria, Governor Godwin Emefiele explained why Nigerian banks were encouraged to restructure as much as 41% of their loans to customers.

“If the CBN did not ask the banks to grant these forbearances to their customers, the loans will go bad immediately by our prudential ratios,” Emefiele stated.

Just a few months ago, the apex bank had granted a temporary suspension on loan interests and repayment on principal debts, in a calculated effort to mitigate the negative impacts of the pandemic. Nairametrics understands that N7.8 trillion worth of loans, out of a total of N19.9 trillion, have so far been restructured for 35,640 customers of 22 banks.

READ MORE: Nigeria’s foreign reserves fall to 6-weeks low, lose $81.10 million

As Emefiele explained, these moves became absolutely necessary amid the COVID-19 pandemic. According to him, it would be preferable to restructure up to 65% of loans instead of allowing such loans to go bad.

The Nigerian banking sector has long been battling to deal with the issue of non-performing loans. Interestingly, Nigeria’s non-performing loan ratio improved to 6.4% as of H1 2020, compared to 11.1% during the comparable period last year.

The backstory

An earlier report by Nairametrics, last month, quoted CBN’s Deputy Governor, Aisha Ahmad, to have disclosed how 17 banks submitted requests to restructure over 32,000 loans for individuals and businesses who were impacted by the pandemic. However, based on Emefiele’s explanation, yesterday, it is apparent that the number of banks that have made that same request is now more than 17, even as the volume of loan restructured is more than 32.94% as previously reported.

READ MORE CBN mulls ‘quantitative easing’ as it considers buying commercial papers at single digits

Explore research data on Nairalytics from Nairametrics


Do note that some top CBN officials, including Governor Godwin Emefiele, met in Abuja yesterday for the 274th meeting of the Monetary Policy Committee. Nairametrics earlier reported that majority of the members voted to retain the Monetary Policy Rate (MPR) constant at 12.5%. You may read up more on the resolutions that were reached during the meeting by clicking here.

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Tags: Business NewsCBN MPC MeetingCentral Bank of NigeriaLoan RestructuringNigeria News

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