Fitch Ratings has projected an increase in non-performing loans within Nigerian banks due to ongoing high interest rates and inflation. In its latest report, Fitch maintained Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B’, signaling a cautiously positive outlook. The report noted that non-performing loans, which stood at 5.1% in Q1 2024, are expected to rise in 2024, though the sector’s loan book is relatively small, comprising 35% of total banking assets.
Additionally, Fitch referenced the Central Bank of Nigeria’s (CBN) recent policies, including the N500 billion recapitalization requirement for Nigerian banks by March 2026 and a 70% windfall levy on banks’ foreign exchange gains. These policies are not expected to breach banks’ capital adequacy ratios.
Fitch also anticipates further increases in Nigeria’s Monetary Policy Rate (MPR) in Q4 2024, as CBN Governor Yemi Cardoso continues efforts to counter inflation. Since Cardoso’s tenure began, the MPR has been raised five times, reaching 27.25% in September 2024—a total of 850 basis points aimed at curbing the country’s escalating inflation rate, which hit 32.7% in September with food inflation at 37.7%.
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