Toxic Assets of MFBs now 45.7%, that of PMBs also Growing

Umaru Ibrahim, managing director and chief executive of the Nigerian Deposit Insurance Corporation (NDIC) has raised the alarm that toxic assets of Micro Finance Banks (MFBs) and that of Primary Mortgage Banks (PMBs) are growing steadily. He said bad debts of MFBs have risen dangerously to 45.7 per cent as against the prescribed 5.0 per cent maximum of total assets.
“our attention is now being focused on both the MFB and PMBS sub-sectors so as to address the emerging challenges”, said Umaru.
He told players in the MFB at a sensitization workshop yesterday efforts to address the ugly trend can only be successful if the operators can embrace good corporate governance and sound risk management practices.
“We cannot afford the repeat of 2008/2009 crisis”, he said.
It will be recalled that the banking sector is he to fully recover from the mess toxic assets Deposit Money Banks (DMBs) plunge the financial sector into during the period.
He reiterated that PMBs can create significant impact if they adhere to recommended corporate governance practices based on effective and sustainable risk management practice based on effective and sustainable risk management practices as instituted by regulatory authorities. 
“in particular, PMBs should be interested in enhanced risk management standards because some mortgage portfolios are on a predominantly variable rate and therefore it is highly sensitive to interest rates fluctuations.
“for instance, an increase in interest rate could make mortgage repayment difficult and result in default which may give rise to toxic assets”, Umaru said.

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