Nigeria’s first credit rating agency, Agusto & Co has said, the Nigerian banking industry has written off a minimum of ₦1.9 trillion of bad loans from its loan portfolio in the last four years owing to the 2015/2016 recession.
In its 2020 Banking Industry Report published on its website, the Agency said that the volume of write offs had been driven by the weak macroeconomic climate and the introduction of the IFRS 9 accounting standard in 2019.
The report added: ”In the last four years, following the 2015/2016 recession, the Nigerian banking industry has written off a minimum of ₦1.9 trillion of impaired loans from its loan portfolio. This volume of write offs has been driven by the weak macroeconomic climate and the introduction of the IFRS 9 accounting standard in 2019.
“In the wake of the unprecedented COVID 19 pandemic, the Industry’s asset quality is further threatened given significant exposures to vulnerable sectors.
The agency noted that the palliative granted to the banks by the Central Bank of Nigeria will moderate the anticipated level of asset quality deterioration in the short term.
“The Central Bank of Nigeria (CBN) has granted palliatives to banks in form of permitted loan restructurings to certain sectors that have been severely affected by the pandemic and we expect this to moderate the anticipated level of asset quality deterioration in the short term”, the rating agency said in the report.