Banks Seek New Legal Power To Tackle Bad Debts

Banks have commenced moves to acquire new legal powers to strengthen loan recovery which deteriorated in the first quarter of 2019 when the industry suffered a major decline in the amount of recoveries made. 

Financial Vanguard analysis of the Q1’2019 financial results of ten banks showed that loan recoveries dropped by 47 percent, year-on-year, to N3.1 billion from N5.8 billion in Q1’2018. The ten banks are Access Bank, Guaranty Trust Bank, FBN Holdings, UBA, and Zenith Bank. The others include Fidelity Bank, Stanbic IBTC Bank, Sterling Bank, Union Bank, and Wema Bank. 

The banks blamed the sharp decline on the lull in economic activities following the general elections held during the quarter. However, loan recovery experts who spoke to Financial Vanguard cited other factors including the yuletide holidays, the legal system and unwillingness of debtors to repay. The trend was led by the five Tier 1 banks which recorded 70 percent decline in loan recovery, down to N1.26 billion in Q1’19 from N4.2 billion in Q1’18. GTBank and Zenith Bank recorded zero loan recovery in Q1’19, as against N487 million and N310 million recorded in Q1’2018 respectively.

(Vanguard)