Commercial banks in Nigeria Non-Performing Loans (NPL ratio has move higher to to 6.3% for the month of February 2020.
However, the apex bank regulatory acceptable NPL ratio is 5%, the situation breached the CBN benchmark since the fall in oil prices began in the 4th quarter of 2019 and the Covid-19 pandemic broke in 2020.
At above 6%, it indicates most commercial banks are carrying more under performing loans than expected mostly because the private sector is not servicing the loans.
The Non-Performing Loans (NPL ratio is one of the most important benchmarks for measuring the health of the banking sector by knowing if bank loans that are either going bad because they are not being serviced adequately or have gone bad completely.
Meanwhile, the Capital Adequacy Ratio which measures the balance sheet strength of banks improved from 15.1% in December 2020 to 15.2% in February 2021. It is still lower than the 15.4% reported in September 2020
On non-performing loans (NPLs), the MPC noted that the ratio remained above the prudential benchmark of 5.0 percent and urged the Bank to sustain its regulatory measures to bring it below the prudential benchmark.