|
Listen now
|
Nigeria’s central bank has urged lenders to recapitalise their balance sheets in the face of high inflation, currency weakness and slow economic growth.
“We must make difficult decisions regarding capital adequacy,” Governor Olayemi Cardoso said on Friday in a speech at the Chartered Institute of Bankers of Nigeria’s annual dinner in Lagos.
“As the first steps, the central bank will be directing banks to increase their capital,” he said.
Nigeria’s annual inflation rate rose to 27.33 per cent in October from 26.72 per cent in the previous month, the National Bureau of Statistics (NBS) said.
Nigeria’s Gross Domestic Product (GDP) grew by a tepid 2.54% (year-on-year) in real terms in the third quarter (Q3) of 2023.
Banks were also hit by a 40% devaluation of the currency after newly elected President Bola Tinubu moved to a more market friendly set of reforms, however banks that were positioned net long the dollar have booked FX gains.
The CBN in September asked deposit money banks (DMBs) to stop utilising foreign exchange (FX) revaluation gains to pay dividends or finance operations.
The average capital adequacy ratio for Nigerian lenders stood at 11.2% in June. The regulatory requirement is 10%, or 15% for lenders with international operations.
Follow the MoneyCentral Nigeria channel on WhatsApp: Click here!