CBN Takes Action Against Fidelity Bank, GTB and 2 Others with N478 Billion Bad Loans

Guarantee Holding Company Plc, FCMB, Fidelity Bank, and FBN Holdings all faced significant issues with non-performing loans in the first half of 2023. Collectively, these four banks accumulated approximately N478 billion in such loans during this period. Notably, First Bank had the highest amount of non-performing loans, totaling around N226.24 billion.

According to their financial reports, approximately N478 billion in non-performing loans were tallied by four Nigerian banks in the first half of 2023. Among these banks were Guarantee Trust Bank Holding, FBN Holding, and two others, collectively reporting about N478.93 billion in non-performing loans for the six-month period concluding in June 2023.

First Bank highest hit with non-performing loans

The figure accounts for nearly 16% of the total of N413 billion that was reported for the year ending on December 31, 2022. The other two banks involved in this are First City Monument Bank and Fidelity Bank.

According to a report by Punch, FBN Holdings recorded N226.24 billion in non-performing loans by value in the first half of 2023, which is an increase from the N202.29 billion reported in 2022. This was accompanied by a non-performing loan ratio of approximately 4.3% and a gross loans and advances figure of N5.26 trillion.

In the 2022 financial year, these banks collectively declared a non-performing loan ratio of 5.4% and a total of N3.79 trillion in gross loans and advances.

GTBank records N115.29 billion in non-performing loans

Guarantee Holding recently announced a significant increase in its non-performing loans, with the total reaching N115.29 billion during the first half of 2023. This marks a notable rise from the N103.37 billion reported for the entire 2022 financial year.

The bank shared this information with investors and analysts, highlighting that the Group’s IFRS Stage 9 Stage 3 loans decreased to 4.6% in the first half of 2023, down from 5.2% in the previous year.

In terms of loan quality, Guarantee Holding pointed out that the highest proportion of non-performing loans was in the individual and emerging sectors, accounting for 20.9% and 30.96% of the total, respectively.

Meanwhile, Fidelity Bank reported a substantial increase in non-performing loans, rising from N61.37 billion in 2022 to N84.73 billion in the first half of 2023. Similarly, FCMB Group also experienced a notable uptick in non-performing loan value, with N52.66 billion reported for the first half of 2023, compared to N45.01 billion in 2022.

CBN orders banks to debit defaulters across financial institutions

The recent developments have resulted in Nigerian banks taking action to write off bad loans while also continuing to deduct money from the accounts of defaulters in order to minimize non-performing loans.

Back in 2020, the Central Bank of Nigeria (CBN) introduced the Global Standing Instruction (GSI) to address non-performing loans within the banking sector and keep a closer eye on persistent debtors, among other objectives.

Under the CBN’s GSI policy, banks are empowered to recover both the outstanding principal and interest in the event of a default directly from any account held by debtors, regardless of which financial institution it’s with in the country.

More recently, the Nigerian Communications Commission (NCC) has announced its intention to penalize loan apps that engage in the unauthorized harvesting of customers’ phone numbers for marketing purposes. The NCC has pledged to collaborate with telecommunications companies to identify and take action against those responsible for such practices.

On Friday, September 9, 2023, the NCC revealed that it has successfully resolved the N120 billion debt issue related to USSD services between the banks and telecom firms.

NGX fines Ecobank, Fidelity Bank, PZ Cussons, others N125m for missing deadline for report submission

ThePressNG reported that at least 26 listed companies were penalised N125 million for failing to submit their 2022 audited financial statements and quarterly reports for the first half of 2023 as required by the Nigerian Exchange.

Banks like Unity Bank, FBN Holdings, Access Holdings, Fidelity Bank, Jaiz Bank, Wema Bank, Guaranty Trust Holdings Plc, and Ecobank Transnational Incorporated were affected, according to The PUNCH.

The sanction also affected John Holt, PZ Cussons, Notore Chemical, Glaxo SmithKline Consumer Nigeria, Industrial Medical and Gases Nigeria, and Juli Plc.