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In a report titled 2020 Banking Industry Report, the credit rating agency, Agusto&Co has claimed that the Nigerian banking industry has written off a minimum of N1.9 trillion of impaired loans from its loan portfolio in the last four years after the economic crisis.

The write-offs, the firm said, we’re driven by the weak macroeconomic climate and the introduction of the international financial reporting standards 9 (IFRS 9) accounting standard in 2019.

“These banks collectively accounted for an estimated 98 percent of the industry’s total assets as at the same date and provide a good representation of the industry,” the agency wrote.

It further added, “In the last four years, following the 2015/2016 recession, the Nigerian banking industry has written off a minimum of N1.9 trillion of impaired loans from its loan portfolio.

“This volume of write-offs has been driven by the weak macroeconomic climate and the introduction of the international financial reporting standards 9 (IFRS 9) accounting standard in 2019.

“In the wake of the unprecedented COVID-19 pandemic, the industry’s asset quality is further threatened given significant exposures to vulnerable sectors.”

The firm also said that the CBN granted palliatives to banks in form of permitted loan restructurings to certain sectors that have been severely affected by the pandemic and expect that this will moderate the anticipated level of asset quality deterioration in the short term.

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