Nigerian banks have huge capacity to absorb NPLs – CBN

By Chioma Obinagwam

The Central Bank of Nigeria(CBN) has said that Nigerian banks have the capacity to absorb Non-performing Loans (NPLs).

This is coming on the heels of a recent report from a stress test conducted by a Dubai-based international investment bank, Arqaam Capital, which indicated that seven Nigerian banks are undercapitalised to the tune of N1tn ($3.2bn).

“We need to focus on the capacity of the banks. The banks have huge capacity to absorb these loans. The loans that are not performing can become performing,” the Director of Banking Supervision, Tokunboh Martins disclosed.

Speaking at the 329th meeting of the Bankers’ Committee in Lagos on Wednesday, she said that the banking industry is not the only sector feeling the effect of the current economic recession.

“The fact that the banking industry is feeling the effect of the economic headwinds should be expected. In fact, all the sectors are feeling the effect; that does not mean that one sector should be demonised,” she added.