COVID-19: Nigerian Banks Make N157.15bn Loan Loss Provisions For 2020 Half-Year

Thirteen Nigerian banks listed on the Nigerian Stock Exchange (NSE) made a total of N157.15bn provisions for bad loans in their operations for the first six months of the 2020 financial year.

The amount, according to Investdata checks at the weekend represented a significant N41.83bn or 36.29% spike when compared to the N115.275bn impairment charge made by the same banks in the corresponding period of 2019.

Some analysts and bank managements have blamed the growth on the impact of the Coronavirus (COVID-19) pandemic that seriously impacted the ability of obligors to repay or service their loan obligations.

For example, Kennedy Uzoka, Group Managing Director of the United Bank for Africa, alluded to the 150% growth in its half-year provisions which he blamed on “short-term challenges to various economic sectors occasioned by the Covid-19 pandemic.”

That is why, he continued in a statement by the bank, UBA Group is now “adjusting (its) operating model in response to the ‘new normal’ and will continue to optimise the way we work and serve customers in the days ahead.”

Explaining further, UBA’s Group Chief Financial Officer, Ugo Nwaghodoh, said the decision to make the N7.807bn impairment charge for credit losses on financial assets was a proactive move to make reserves “for loan impairments in recognition of potential losses on the portfolio.”

Data mined by Investdata Research from half-year 2020 reports presented by the banks to the Nigerian Stock Exchange (NSE) showed that the 13 banks reported N2217tr in total loan book, up by N1.55tr, or 7.52% from the N20.622tr in the corresponding period of last year.

Ecobank Transnational Incorporated Plc reported the biggest impairment charge at N49.852bn, a marginal decline from N49.637bn; followed by FBN Holdings’ N30.651bn from N22.107bn in the prior half-year; while Zenith Bank made N23.923bn provisions, from N13.735bn.

The biggest percentage jumps in impairment charge were seen in Access Bank’s N16.465bn from N4.879bn; Guaranty Trust Bank’s N6.769bn, as against the previous N2.186bn; while Stanbic IBTC Holdings’ charge galloped from just N557m to N6.404bn.

That of UBA climbed from N3.12bn; Sterling Bank, from N2.429bn to N6.457bn; even as Unity Bank’s impairment charge fell from N491.137m in the 2019 half-year to N313.963m.