Statistical Evaluation of Microfinance Bank Loan Performance in South East Nigeria

Microfinance banks serve as critical credit access points for small enterprises and low-income households in South East Nigeria, yet statistical evaluation of their loan portfolio performance is rarely conducted at the state level using administrative data. This study statistically evaluates loan performance indicators of microfinance banks in Anambra, Enugu, and Imo States from 2019 to 2022 using data from the Central Bank of Nigeria's microfinance bank supervision reports. Performance indicators analysed include non-performing loan ratio, loan recovery rate, return on assets, and credit growth rate. Descriptive statistics characterised distributions across the three states. Analysis of variance tested inter-state differences, and Pearson correlation explored relationships between loan performance metrics. The mean non-performing loan ratio was 18.4 percent across the three-state sample, substantially above the CBN prudential limit of 5 percent. Anambra State microfinance banks showed the lowest mean non-performing loan ratio at 14.2 percent, while Imo State recorded the highest at 22.7 percent. ANOVA confirmed statistically significant inter-state differences in non-performing loan ratios (F = 8.31, p = 0.001). Credit growth rate showed a significant negative correlation with non-performing loan ratio (r = -0.62, p < 0.001). The COVID-19 period was associated with a statistically significant spike in non-performing loans across all three states. The study recommends CBN-coordinated credit risk management training for South East microfinance bank loan officers and strengthened borrower assessment protocols. Keywords: microfinance bank, loan performance, non-performing loans, South East Nigeria, ANOVA