January 12, 2023
Deposits by Nigerian banks rose by N6.92tn from N36.13tn as of the end of October 2021 to N43.05tn in the corresponding period of 2022.
This was contained in the personal statements of members of the Central Bank of Nigeria Monetary Policy Committee.
The Deputy Governor, Financial System Stability Directorate, CBN, Aishah Ahmad, said, “Notably, total assets rose to N69.67tn in October 2022 from N57.3tn in October 2021, while total deposits rose to N43.05tn from N36.13tn over the same period. Total credit also increased by N5.32tn to N28.81tn between end-October 2021 and end-October 2022 with significant growth in credit to manufacturing, general commerce, and oil & gas sectors.
“The continued credit expansion particularly to output-enhancing sectors is expected to further support economic activities. However, sustained regulatory vigilance is required to mitigate any potential crystallisation of credit risk in the financial system in view of lingering macroeconomic risks.
“As anticipated, average lending rates have risen between June and October 2022, partly driven by the tight monetary policy stance of the MPC, which requires vigilance by the banks to forestall defaults and preserve asset quality.”
She said sustained implementation of the policy on GSI and effective credit risk management policies by the banks were useful in that regard, while recent initiatives of the Central Bank such as the naira redesign were expected to enhance monetary policy transmission via the banking system.
Notwithstanding the strong financial system fundamentals and satisfactory stress test results, she said, the Bank must remain vigilant and proactively manage operational, asset quality and other risks to financial system stability, especially with the challenging global economic environment.
Also, a member of the MPC, Shonubi Folashodun, said the banking system had remained resilient so far in 2022, even as it continued to grapple with the effects of a challenging macroeconomic environment on businesses.
He said, “Industry non-performing loan ratio was 4.8 per cent in October 2022 below the 5.0 per cent threshold, while industry liquidity ratio was 40.1 per cent, above the 30.0 per cent minimum level. Of note is the sustained growth in total industry deposits, credits, and assets, reflecting positive impact of various measures by the Bank.
“Industry capital adequacy, though lower at 13.4 per cent, was above the 10.0 per cent prudential minimum. Significant rise in domestic claims on private sector and the government has however pushed annualised growth of major monetary aggregate slightly above the benchmark for fiscal 2022, highlighting monetary aspect of the drivers of inflationary pressure.”
An MPC member, Robert Asogwa, said the domestic financial sector was still resilient in November except for observed volatilities in the stock market.
He said, “The banking sector indicators are robust, similar to the position at the last MPC meeting, with non-performing loans ratio declining further from 4.9 per cent to 4.8 per cent in October 2022 and with further increases in total assets.
“Of particular interest is the addition of above N1tn in total industry deposits between September and October 2022.
“Of marginal concern, is the consistent decline in the capital adequacy ratio of the banks between June and October 2022, but this is attributed to increases in total risk-weighted assets, which for some time has been higher than the total qualifying capital.”