Credit ratings agency Fitch has projected an increase in non-performing loans of Nigerian banks this year, citing high interest rates and inflation in the country.
In its latest credit ratings report on Nigeria, the agency affirmed the country’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B-‘ with a Positive Outlook, saying the loan books of the banking sector at 35% of assets in the sector by the end of 2023 were low.
It further referenced the CBN’s increase in capital requirement for banks that is meant to be completed by the end of the first quarter of 2026 together with the amendment of the 2020 finance act which imposed a 70 per cent windfall levy on banks’ foreign exchange gains in 2023 and Q1, 2024, noting that these decisions will not lead to capital adequacy ratio breaches.
Fitch noted that it expected the MPR to rise again in the last quarter of 2024, alongside the ongoing use of prudential and operational tools like open market operations, with rates set near the MPR, aimed at improving the effectiveness of monetary policy transmission after prolonged financial repression.
