To further enhance its financial intermediation role to the real sector, especially small and medium enterprises, the Bank of Industry (BoI) has partnered auditors on measures to improve its risk assets and exposure to the sector.
According to the Bank, the partnership is expected to aid appraisal of assets presented by businesses seeking loans from the institution in order to ensure that the ratio of non-performing loans in the institution is further reduced from the present four per cent.
Acting Managing Director/Chief Executive Officer of BoI, Waheed Olagunju explained that disbursement of funds is based on appraisal through processes designed by the bank to avoid loan defaults from customers, adding that the bank needs to remain healthy to provide financial intermediation in the real sector.
Indeed, Moody’s, in its Global Credit Research report, noted that the Bank of Industry’s reported non-performing loans ratio (NPLs) is relatively low at 4.6 per cent as of November 2015 and compares favourably to development bank peers globally.
Moody’s said: “Low NPLs are partly explained by the exposures relating to the CBN intervention fund, which are guaranteed by commercial banks and, as such, have generated close to zero NPLs as Bank of Industry exercises the guarantee immediately after any of these loans become delinquent.
“That said, the ratings currently assigned to Bank of Industry take into account our expectation of a higher NPL level (between 5 and 10 per cent of total loans) over the next two years, as we expect asset quality to come under pressure as the bank increases its loan exposure within Nigeria’s challenging operating environment.
